Meralco sees 2011 sales flat to down

Reuters

Posted at Jul 12 2011 11:59 AM | Updated as of Jul 12 2011 07:59 PM

MANILA, Philippines - The country's largest power distributor, Manila Electric Co. (Meralco), expects its sales this year to be flat to slightly down, although cost and operating efficiencies may still lift its bottom line, the company president said.

It would be difficult to match Meralco's record sales last year of P245.6 billion ($5.7 billion), up 61% from a year earlier, said Manuel Pangilinan, president and chief executive.

"In terms of sales, not so good. It's flattish to slightly down, we're seeing that, for the year," Pangilinan told Reuters in an interview late on Monday.

"I believe our electricity sales will be ahead of 2009 but flattish to down compared to 2010. The caveat being 2010 was a slightly exceptional year, but it does impact on one's own assessment of growth in the economy as a whole," he said.

"But they are reporting good numbers despite the sales," Pangilinan said, adding cost cuts, higher power rates, and lower losses from unbilled electricity sales mainly from illegal connections would help support profits.

Shares of Meralco lost nearly 8% in early trade on Tuesday as the broader market index slipped 0.8%.

Meralco, whose power sales are often used by analysts as a barometer for economic activity, previously estimated its first half core net income to be higher than a year ago. Core net income takes out the effects of foreign exchange gains or losses, mark-to-market adjustments and provisions for losses.

In the first quarter, it posted a 64% rise in core net income, to P3.25 billion despite a 6% drop in revenue.

Pangilinan said the company, partly owned by the First Pacific Group and San Miguel Corp., would give its earnings guidance for 2011 when it announces its first half results on July 25.

Analysts expect Meralco's net income to reach P16.8 billion this year after record net income of P9.7 billion in 2010, supported by a 4% rise in revenue to P256 billion, consensus estimates from Thomson Reuters I/B/E/S show.