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DMCI sees 2016 profit remaining flat at P12B

Unit Semirara forecast to contribute P10B
/ 12:42 AM July 28, 2016

Consunji-led DMCI Holdings Inc. aims to generate P12 billion in net profit this year, matching last year’s performance, as improved earnings from Semirara Mining and Power Corp. are seen to make up for the slack in other businesses.

In a press briefing after the company’s stockholders’ meeting Wednesday, DMCI president Isidro Consunji said Semirara would likely perform better this year with a higher profit of P10 billion from P8.64 billion in 2015.

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Semirara’s profit growth will be driven by higher coal production as well as earnings from the group’s additional power plant capacity in Calaca, Batangas.

Consunji said Semirara has so far produced six million tons of coal, adding that 10 million tons might be attainable for the full year even taking into account the wet season, which could hamper extraction in the second semester. Coal prices, on the other hand, remained low but have been improving.

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Semirara’s projected earnings of P10 billion would likely be equally driven by coal and power production.

On the other hand, Consunji said the flat earnings outlook compared to last year for DMCI would be due to the expected decline in contribution from water utility Maynilad Water Services Inc. and the housing business under DMCI Homes.

In 2015, DMCI grew its net profit by 19 percent to P12.8 billion. Excluding P530 million one-time gain from the sale of its stake in the Tarlac-Pangasinan-La Union Toll Expressway project, core net profit last year amounted to P12.3 billion.

For the housing business, Consunji said net income would likely drop based on the expected volume of residential units to be completed this year. Unlike many other residential developers that book revenues based on a certain percentage of project completion, he said DMCI’s practice was to recognize earnings from residential sales only upon project completion and turnover.

As such, he said sales take-up—an indicator of future revenue growth—would likely rise by 10 percent this year as DMCI Homes continued to increase its inventory by launching more projects each year. However,  he said project completion would drop this year, resulting in lower profit for the housing arm.

For the construction business, Consunji said the group would wait for the government’s infrastructure program. President Duterte had said that he would like to see infrastructure spending rise to 5-7 percent of gross domestic product (GDP), which Consunji said would be good for the country.

In the last two years, profit generated by the construction business fell below the P1-billion mark due to cost overruns and delayed right-of-way turnover.

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The entire construction industry, he said, would look forward to the policy programs of the Departments of Transportation and of Public Works and Highways. He said the industry would like to find out what the effect of the proposed emergency powers to the President would be on infrastructure and traffic situation in the metropolis.

“I think the priorities are very good: Let’s get things done, not just talk about it,” he said.

During the stockholders’ meeting, Consunji said that as a new decade began for the company, there would be a “reshaping” of its growth strategy by building decent housing for low-income and lower middle-class facilities by using the group’s scale, resources and expertise to deliver quality homes to those with modest means; building an energy portfolio that has an optimum blend of conventional and sustainable energy; strengthening collaboration with industry leaders to generate high-value projects for core businesses, and developing new business that would complement and boost existing capacities and future investments.

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