MPIC posts drop in profit, halves capex to ₱80 billion

Published May 6, 2020, 12:00 AM

by manilabulletin_admin

By James A. Loyola

Metro Pacific Investments Corporation (MPIC) reported its first ever fall in quarterly earnings due to the COVID-19 pandemic which has also prompted it to slash its capital expenditure (capex) program by half to ₱80 billion from ₱160 billion.

In an digital media briefing, MPIC President Jose Ma. Lim said consolidated core net income declined 6 percent to ₱3.4 billion in the first three months of 2020 from ₱3.7 billion in the same period last year.

He said this is due “largely to the economic contraction stemming from the Philippine Government’s work to contain the spread of the COVID-19 pandemic through an enhanced community quarantine (ECQ) launched late in the first quarter.”

“The ECQ reduced toll road traffic, suspended rail services and decreased commercial and industrial demand for water and power resulting in a decrease in contribution from operations of 5 percent,” Lim explained.

Power accounted for ₱2.87 billion or 62 percent of net operating income; Tollroads contributed ₱0.92 billion or 20 percent and Water contributed ₱0.86 billion or 18 percent.

Contribution from Hospitals, Rail, Logistics and other businesses offset each other.

Consolidated reported attribut¬able net income fell to ₱1.9 billion for the first three months of 2020 from ₱3.5 billion a year earlier due to the provisioning in full of the carrying value of Meralco’s investment in Pacific Light Power, a gas-fired power plant in Singapore.

“Our first ever fall in year-on-year quarterly earnings is understandable, but overall I believe the strength of our portfolio, most especially power and water, has been demonstrated in the face of the pandemic, and despite investors’ stated concerns on regulatory is¬sues,” said MPIC Chairman Manuel V. Pangilinan.

“The robustness of our operations, even in these difficult times, reflects a decade and more of sustained capital investment,” said Lim.

He added that, “The benefits of the continued expansion in our overall customer coverage manifested early in the first quarter through increased volumes ahead of the implementation of the ECQ, and since the ECQ, in increasing service standards despite the restricted operating environment.”

Lim warned that, “The 5 percent reduction in contribution from operations, which we attribute to the ECQ, will accelerate in the second quarter as the ECQ has been lengthened.

MPIC Chief Financial Officer David Nicol said that, “in reaction to circumstances, we had to scale down the capex plans. As it stands now, we cut back everything we regard as discretionary projects.”

“In terms of what is described as discretionary, areas including ivnestments in hospitality and the rapid expansion of the logistics businesses. Those things have been pushed back… in the near term, we will hold on to cash,” he explained.

Lim said “Preserving cash is our immediate priority. MPIC itself is well funded due to the P30.1 billion sell down of our interest in our Hospitals Business at the end of 2019. We moved to suspend our previously announced share buyback and other discretionary projects.”

He added that, “Maynilad is currently unable to pay a dividend pending the outcome of the Concession Agreement review, and as a result of the ECQ and other consequences of the COVID-19 outbreak, we may expect lower dividends from our power and toll roads businesses for 2020.”

Pangilinan said that, “it is likely that our secondquarter results are likely to fall short of last year’s. That said, due to the prudent financial management of MPIC and of our major operating companies we are well placed to pull through this crisis, and in fact, likely maintain our dividends to shareholders.”