Metro Pacific books P11.3B in core profit

METRO PACIFIC Investments Corp. (MPIC)’s expansion into the power industry lifted its consolidated core profit by 22% in the first nine months of 2017, complemented by continued traffic growth in its toll roads.

MPIC posted a consolidated core net income of P11.3 billion for the nine months ending September, against the P9.3 billion it posted in the same period in 2016. This keeps the company on track to hit its P13.8 billion core net income target for 2017.

“The strong growth is directly in relation to the strong operating contributions from our operating companies. Power, toll roads, and water in particular are 95% of the contributors to MPIC’s bottom line,” MPIC President and Chief Executive Officer Jose Ma. K. Lim said in a press briefing in Makati City on Wednesday.

MPIC’s power business is the largest contributor to its operating income at 54% or P7.6 billion, followed by toll roads which account for 21% or P3 billion, and 20% from water distribution, production, and sewerage treatment or P2.8 billion. The remaining 15% are split between the hospital group and rail, logistics, and systems groups.

The infrastructure conglomerate benefited from its various step- up investments in Manila Electric Company (Meralco) and Global Business Power Corp. ( GBPC), which accounted for P7.6 billion of MPIC’s bottom line for the first three quarters of 2017.

MPIC had expanded its ownership in Beacon Electric Asset Holdings, Inc. in the first half of 2017 by 25%, thus increasing its stake in Meralco to 45.5% from 32%, and in GBPC to 64% from 51%, both from its initial position in May 2016.

Meralco grew its core profit by 3% during the period to P15.4 billion, following a 10% increase in revenues to P214.4 billion driven by energy sales and pass-through generation charges. The power distributor had rolled out P8.1 billion in capital expenditures during the period, in order to service the larger demand for power and customer connections.

MPIC’s toll roads business through Metro Pacific Tollways Corp. (MPTC), meanwhile, saw a 28% uptick in core profit to P3 billion during the period, with systemwide vehicle entries rising by 8% to 589,307 vehicles a day.

MPTC has previously said it will be spending P3.7 billion for ongoing roadworks in the North Luzon Expressway, Subic Clark Tarlac Expressway, and Cavite Expressway until the end of 2017. In the next five years, MPTC has again committed to spend P122.8 billion for building highways and toll roads in the country.

With these investments, MPTC said it is imperative that overdue tariff increases ranging between 20-48% be implemented to make up for the company’s investments.

“We are in constructive talks with the government on how best to achieve this and are hopeful of resolution soon,” the company said.

Overseas, MPTC has recently acquired a 48.3% ownership in Indonesia infrastructure holding firm PT Nusantara Infrastructure Tbk for P7.5 billion. Around 80% of PT Nusantara’s core profit comes from toll roads, traversed by around 300,000 vehicles daily.

MPTC Chief Financial Officer Christopher C. Luzo said PT Nusantara could boost its business by contributing to about 14% of MPTC’s revenues.

The acquisition further brought MPTC’s presence to three countries in the ASEAN region, namely Thailand, Vietnam, and Indonesia.

Revenues of Maynilad Water Services, Inc. picked up 4% to P15.6 billion, pushing core net income to P5.6 billion during the period. By the end of September, Maynilad was able to add 4% more billed customers to its network to 1.35 million.

Maynilad, however, has yet to resolve tariff implementation issues, despite an arbitral tribunal ordering the Philippine government to reimburse at least P3.4 billion for losses it incurred from the delayed implementation of its rebased water rates.

Maynilad said it is still waiting for confirmation from the Metropolitan Waterworks and Sewerage whether it will act on its petition for the confirmation and enforcement of arbitral award.

“We are optimistic about at least partial settlements at least on tariff issues with regard to the rates. We’re still in discussion as to the lost revenues, that one will probably take a little more time to discuss with government. But so far the progress we’ve made in the discussion on the rates itself has been positive and encouraging,” Mr. Lim said.

Meanwhile, MPIC said it remains committed to take over operations of the Metro Rail Transit Line- 3 ( MRT- 3), noting that the same changes in Light Rail Transit Line-1 (LRT-1) should be implemented in MRT-3.

Mr. Lim noted LRT-1’s rehabilitation, which includes new rails, is already 95% completed.

“The MRT-3 is a challenge because of numerous breakdowns but we have been receiving some technical assessments by our own people... We’ll try to assist the government in any way we can,” Mr. Lim said.

MPIC is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc. — a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — maintains interest in BusinessWorld through the Philippine Star Group, which it controls.

Shares in MPIC added 15 centavos or 2.22% to P6.90 each at the stock exchange on Wednesday.