DMCI expects 6-month profit to grow by 17%

Conglomerate DMCI Holdings Inc. likely posted a six-month net profit of P6 billion, suggesting a year-on-year growth of about 17 percent.

DMCI president Isidro Consunji told reporters after the company’s annual stockholders meeting yesterday that Semirara Mining and Power Corp. would likely deliver P4.5 billion in net profit for the first six months of the year.

Consunji said the conglomerate was still on track to hitting its full-year core net profit goal of P12 billion, as earnings in the first six months was projected to hit P6 billion. However, DMCI has yet to price in the financial impact of the July 17 landslide that occurred at the northern edge of the Panian mine on Semirara Island in Antique. This is seen affecting results in the second semester.

The operations at Panian and DMCI’s other mining sites were suspended following the tragic accident. It also stopped its coal exporting operations.

“We’re hoping that the (government) suspension won’t take too long,” Consunji said. When a landslide occurred in Panian in 2013, operations were suspended for more than one month.

Coal mining contributes about 46 percent of Semirara’s earnings and about 20 percent of DMCI’s total earnings. In 2014, SMPC’s consolidated profit dipped by 5 percent to P7.1 billion. When Semirara stopped coal exportation, Consunji said it had about 800,000 tons of stockpiled coal. This, however, has gone down to 500,000 tons, equivalent to a one month inventory, valued at P1 billion.

Because the landslide was due to force of nature, Consunji said Semirara would not be penalized by buyers for unserved foreign supply contracts.

In his report to stockholders, Consunji said DMCI would capitalize on its track record in building complex structures by actively pursuing public-private partnership (PPP) and power plant projects to boost domestic infrastructure quality.

“SMPC and its subsidiaries will expand their coal and power operations to serve the growing demand for fuel and electricity in the Philippines,” Consunji said.

Commercial operations of a low-grade coal-fired 2x150MW (megawatts) power plant is expected to commence by yearend while talks are under way to build a 2x350MW power facility. For the latter, DMCI expects to own 50 percent, suggesting an additional attributable power generation capacity of 350 megawatts.

As such, DMCI expects to have 650 MW in annual power generation capacity in four to five years, summing up the two units of 150MW power plants that will run this year and half of the capacity (representing its attributable ownership) of the upcoming new plant in Calaca.

“We intend to sign the EPC (engineering, procurement and construction) contract by end of the year,” Consunji said, adding that DMCI had found a partner to take up the other half of the 2x350MW power project. He, however, did not identify the partner.

He said the project was worth more than $1 billion and would likely be operational 42 months after the EPC signing.