Meralco Q1 profit rises 10% due to ‘unusually’ strong energy sales

MANILA ELECTRIC Co. (Meralco), the country’s biggest power distribution utility, posted a net income of P5.31 billion in the first quarter, up 10% from the same period last year, largely because of higher energy sales.

Adjusted for one-time, exceptional transactions, core net income at P4.92 billion was higher by 6.9% from a year ago.

“We were quite surprised by the unusually strong sales that we saw in the first quarter, particularly in March,” said Oscar S. Reyes, Meralco president and chief executive officer, during the company’s quarterly financial briefing.

Meralco Chairman Manuel V. Pangilinan described the quarterly performance as possibly resulting in a “better year” for the distribution utility.

Energy sales in the first quarter went up nearly 9% to 10,145 gigawatt-hours (GWh), even as average distribution rate was a centavo lower at P1.40 per kilowatt-hour (kWh).

Also contributing to the higher profit during the period was the flat operating and maintenance expenses and adjustment of provisions for impairment of certain trade receivables, said Betty C. Siy-Yap, Meralco senior vice-president and chief finance officer.

Consolidated revenues for the first three months reached P70.81 billion, up 6.4% compared with the same period last year. Electricity revenues accounted for the bulk at P69.01 billion, higher by 6.6% from a year ago.

Mr. Reyes said industrial customers recorded the biggest growth in terms of power consumption at 11% to 3,014 GWh. Residential customers followed with a 9% increase to 2,997 GWH, while the commercial segment posted an 8% increase to 3,979 GWh.

He said commercial sales volume were still driven by the real estate, retail trade, and hotel and restaurant business.

Real estate and retail trade had been supported by the mixed-use developments to meet the strong demand for residential and commercial spaces for the business process outsourcing sector and offshore gaming operations. Operations of hotels that opened last year continue to ramp up and normalize in 2018.

The rise in industrial sales volume had been largely spurred by the semiconductor, food and beverage, and rubber and plastics industries.

Mr. Reyes reported that Meralco’s customer base as of the third quarter increased by nearly 5% to 6.4 million, of which 290,000 are net new accounts since March 2017.

The residential customer base, which increased by 5% represented 92% of Meralco’s customer base. The figure includes 93,522 prepaid electricity customers, up from 49,825 as of endMarch 2017.

“Our first quarter billed volume growth of 9% is encouraging and indicative of continuing strong economic growth. Domestic consumption and investment expenditures remain rather strong; the prospect of regional stability with the recent developments in North and South Korea and the friendly tone in Philippine-China relations add to this positive view,” Mr. Pangilinan said in a statement distributed during the briefing.

On Monday, shares in Meralco rose by 2.48% to close at P322 each. —