Meralco Q1 profit reaches P4.08 billion

By Lenie Lectura, BusinessMirror

Posted at Apr 29 2014 07:40 AM | Updated as of Apr 29 2014 03:40 PM

MANILA - Power retailer Manila Electric Co. (Meralco) posted a flat core net income in the first quarter of the year, from P4.02 billion to P4.08 billion at end-March this year, as revenues dipped because of lower energy consumption.

Revenues declined by 15 percent to P54.04 billion from P64.15 billion. Revenues from electricity sales decreased by 15.8 percent to P54.04 billion from P64.15 billion.

The lower sales were blamed on low consumption by Meralco customers, which grew by only 3 percent to more than 5.4 million at end-March this year. President Oscar Reyes said cooler temperature was experienced during the first three months of the year while a slight uptick in inflation weighed heavily on electricity consumption. Concerns on electricity prices also made consumers vigilant in consumption activities.

“In terms of providing a full-year forecast, we would have to see what happens in the second quarter. But the soft electricity consumption pattern in the first quarter continues to be reflected in April,” said Reyes in a news conference.

He said energy sales growth this month could be “below 1.7 percent … perhaps 1.3 percent to 1.5 percent.”

Meralco Chief Finance Officer Betty Sy attributed the lower electric revenues to the combined effect if a billing adjustment by the Philippine Electricity Market Corp. for power purchases from the Wholesale Electricity Spot Market in December 2013 based on an order from the Energy Regulatory Commission, which amounted to P9.3 billion.

While customer count increased, electricity volume grew less than 2 percent to 7,908 gigawatt-hours (GWh) from 7,777 GWh in 2013.

Meralco Chairman Manuel V. Pangilinan, in a statement, said the first-quarter 2014 energy sales were soft with no recovery seen in April. “Power supply toward the latter part of the quarter and into the second quarter remains very tight due to outages of major base load plants.

We wish to have clear visibility on the commercial and financial results during the second quarter and intend to provide guidance on the company’s core net income expectations at our July 2014 briefing,” said Pangilinan.

The utility firm explained that despite an increase in residential customers, which account for over 91 percent of Meralco’s entire customer base, consumption declined by over 3 percent compared with 2013 volume. The commercial/industrial segment, meanwhile, registered a growth of 2 percent.

Capital expenditures during the first three months totaled P2.1 billion while total cash stood at P63.9 billion.

Meralco drew a P7.2 billion, 10-year fixed rate loan in the first quarter to raise funds to prepay P4.9 billion in debts by the second quarter of the year.