DMCI group profit down 6% in 9 months

MANILA, Philippines–Consunji-led DMCI Holdings posted a 6-percent year-on-year decline in core net profit for the first nine months to P7.5 billion on weaker earnings from its power and construction businesses.

Headline net profit for the period declined by 54 percent year on year to P7.54 billion as the comparative profit in 2013 was buoyed by about P8.35 billion in extraordinary gain from the sale of shares in water utility Maynilad Water Services Inc.

Last year, DMCI sold a 16-percent stake in Maynilad to a subsidiary of Marubeni Corp.

On the decline in core earnings, DMCI said “maintenance contractor delays resulted in extended outages in its Calaca power units, exposing the company’s power segment to high Wholesale Electricity Spot Market (WESM) prices for its replacement power in the first half of the year.”

Earnings from its construction business were dragged down by cost overruns in its engineering, procurement and construction (EPC) contract for a power plant.

Likewise cited as a factor was the delayed implementation of major public infrastructure projects due to right-of-way and utility relocation issues.

“The cost overruns were due to the inaccurate steel and concrete material estimates of the foreign power plant designers. However, the lessons we learned from being the first Filipino EPC contractor will be invaluable in our next forays into power plant construction. We will be more circumspect in our risk management moving forward,” DMCI Holdings president Isidro Consunji said in a statement.

On the other hand, DMCI reported that other subsidiaries performed well in the first nine months of 2014. Net income contribution from DMCI’s mining businesses surged by P1.2 billion to P1.8 billion this year from year-ago level. The nickel segment posted an P850 million increase, to P870 million from only P20 million in 2013. This was due to higher sales volume and better average prices.

The real estate segment also delivered a 29-percent year-on-year growth in nine-month net income to P2.6 billion mainly from gains realized on the sale of lots.–Doris C. Dumlao