Project delays weigh on Megawide earnings
MEGAWIDE Construction Corp. saw a 36% annual decline in net income last year, weighed by project delays, according to its audited annual financial statement filed with the stock exchange yesterday.
Bottom line fell to P887.16 million in 2014 from P1.4 billion the year before, its regulatory filing showed.
The listed builder said this was mainly due to “lower construction revenues realized,” which is “a typical cycle in the construction business if there are more projects at finishing stages than projects at early stages of construction.”
Operating revenue slipped by 7.7% to P10.04 billion.
“Construction revenues softened by P838 million due to new projects of the Parent Company ( Megawide Corp.) that did not start as scheduled in 2014 and pushed the construction towards the end of 2014 and early 2015,” Megawide explained.
Causes of delay are “various external reasons” such as design coordination with clients, permitting works, access to site, and “other related site conditions,” it said.
The company said the snags are “typical and normal of startup projects,” including those under partnerships with listed developers 8990 Holdings, Inc., Rockwell Land Corp., Megaworld Corp., as well as with Philippine American Life and General Insurance Co.
In addition, construction of public-private partnership projects “did not start as scheduled,” particularly the modernization of the Philippine Orthopedic Center; and the P34.44-billion contract to build a new terminal at the Mactan-Cebu International Airport (MCIA) and upgrade an old facility.
The group took over the operations and maintenance of the MCIA on Nov. 1 last year, which accounted for 2% or P199.96 million of consolidated revenues.
Megawide noted that 2014 was the first year it would recognize revenues outside its traditional construction business —”a breakthrough in its continuous diversification initiatives to weather… the cyclical nature of the construction industry.”
“Moving forward, the Group’s airport business contribution to the consolidated revenues is expected to increase to double digit[s],” the report read.
Megawide said it has a “better outlook” on construction revenues in 2015 as it expects the completion of its projects to “ramp up.” It added that its order book has reached P30.26 billion as of March 30 this year.
The construction company, which acts as the contractor of several real estate giants in the country, holds a 100% stake in Altria East Land, Inc.; 60% in GMR Megawide Cebu Airport Corp.; 70% in Megawatt Clean Energy, Inc.; and 50% in Megawide World Citi Consortium, Inc.
Citicore Holdings Investment, Inc. owns 56.8% of Megawide, whose affiliates are My Space Properties, Inc.; Citicore-Megawide Consortium, Inc.; Future State Myspace, Inc.; IRMO Inc.; Megapolitan Realty and Development Corp.; and Philwide Development and Construction Corp.
Megawide shares lost 15 centavos or 1.88% to close at P7.85 yesterday.