Lopez Holdings’ 1H profit down 93% as FPH swung to net loss

MANILA, Philippines–Lopez Holdings Corp. posted a 93 percent year-on-year decline in first semester net profit to P815 million in the absence of extraordinary gains from last year’s sale of additional shares in utility Manila Electric Co.

This developed as power-based unit First Philippine Holdings Corp. swung to a net loss attributable to parent company Lopez Holdings of P284 million compared to a net income of P24.9 billion in the same six-month period last year. The loss was largely due to geothermal power unit Energy Development Corp.’s P5 billion impairment charge for its Northern Negros Geothermal Power Plant (NNGP).

FPH reported that its recurring income was still positive at P1 billion, though lower by P208 million or 17 percent from last year’s level, due to the decrease in earnings contribution of subsidiaries and associates. EDC, a unit of FPH’s subsidiary First Gen Corp., had said that the impairment charge was a “non-cash” item and will not affect its ability to declare dividends.

For its part, Lopez Holdings booked P127 million equity in the net loss of associates, following the attributable net loss of associate FPH during the period. The equity in net earnings of associates amounting to P10.64 billion in the first half of 2010 included the parent company’s share in the gain on sale of Meralco shares by FPH.

Unaudited consolidated revenues decreased by 18 percent year-on-year to P13.88 billion from a year ago, mainly attributed to lower first half results for broadcasting unit ABS-CBN Corp. in the absence this year of election-related advertising that boosted revenues in the same period last year.

Excluding the election-related revenues of P3.1 billion last year, ABS-CBN’s consolidated revenues would have inched up 1 percent year-on-year. The attributable net income of ABS-CBN for the first half was 26 percent lower year-on-year at P1.68 billion, inclusive of a P674 million gain on sale of SkyCable Philippine Depositary Receipts.

For its part, FPH’s subsidiary EDC made a final provision for impairment, resulting from decommissioning the 49 megawatt NNGP. The writedown led to EDC’s loss contribution to FGEN in the first half.

“ABS-CBN is still targeting to equal its 2010 performance. Removing the effects of the gain on sale of Sky Cable PDRs (from this year’s first semester) and the P3.1 billion revenues from political and advocacy ads (from first semester of last year), ABS-CBN’s net income would have increased by 19 percent,” said Lopez Holdings president Salvador Tirona.

“As for our energy group, the P5 billion-impairment charge taken by EDC is a non-cash transaction hence, will not affect EDC’s ability to declare dividends,” he added.