Consunji-led conglomerate DMCI Holdings Inc. saw a 5-percent year-on-year drop in first semester net profit to P6.2 billion due to a decline in earnings from real estate, water utility and nickel mining businesses.
Excluding the one-time gain on sale of a 10-percent stake in Subic Water, the core net income of DMCI Holdings declined by 7 percent year-on-year to P6.1 billion.
“Since last year, we have been anticipating an earnings slowdown in DMCI Homes because of the deferred recognition of revenue from its completed high-rise projects. The expiration of Maynilad’s income tax holiday in 2015 also affected our bottom line,” DMCI Holdings chair and president Isidro Consunji said in a statement.
DMCI Homes contributed P708 million in earnings for the first six months, down 59 percent year-on-year. Although it registered higher sales and reservations in the first six months, its deferred recording of accounting revenue weighed down overall profitability.
Unlike peers in the real estate industry, DMCI Homes books sales as revenue only when a unit is fully completed and at least 15 percent of the contract price is collected. In 2015, DMCI shifted to developing more high-rise projects, which takes about three years to complete.
“We expect income recognition to rebound by 2018. This is really just a timing issue for DMCI Homes,” said Consunji.
Net income contributions from Maynilad Water Services Inc. fell by 4 percent to P1.1 billion. The 4-percent year-on-year increase in billed volume and the 5-percent rise in average effective tariff muted the impact of the fresh tax burden.
Meanwhile, depressed nickel prices and reduced shipments dragged the performance of nickel mining arm DMCI Mining Corp. in the first six months. Attributable net income from DMCI Mining slid by 87 percent to P57 million.
“For the second half of the year, we expect even weaker results from DMCI Mining because of the suspended operations of its mining units in Palawan and Zambales,” Consunji said.
Contribution from DMCI Holdings and other investments fell 19 percent to P42 million due to reduced interest in Subic Water. Doris Dumlao-Abadilla