Metro Pacific posts P9.3B core profit

Infrastructure holding firm Metro Pacific Investments Corp. grew its nine-month core profit by 13 percent year-on-year to P9.3 billion on expanded power portfolio and higher earnings from tollroads and hospital businesses.

Including extraordinary items, MPIC’s reported net income rose by 22 percent year-on-year to P9.5 billion. Non-recurring income amounted to P196 million following a reassessment of future deferred taxes and discharge from certain guaranty undertakings.

Given the nine-month performance, MPIC chair Manuel Pangilinan raised full-year core net income guidance to P11.7 billion from P11.5 billion a quarter ago.

“All our businesses are fully focused on service quality and operational efficiency, while at the same time growing our sales and core profitability to improve the lives of all our customers – providing first class medical care, offering safe and efficient road and rail transportation, delivering electricity to power homes and businesses, and piping clean, safe water to improve consumption and sanitation,” Pangilinan said in a press statement on Tuesday.

“The strong results during the first nine months of the year reflect our ongoing expansion of investment, continuing improvements in service levels and efficiency as well as financial gains for our operating companies,” he said.

Moving forward, Pangilinan said he was hopeful to see some progress on resolution of past regulatory issues which he said would further increase funds for investments and contribute to an acceptable return on our shareholders’ funds.

MPIC’s core net income was lifted by robust traffic growth on all the roads held by Metro Pacific Tollways Corp.; an expanded power portfolio through increased investment in Beacon Electric Asset Holdings Inc. and Global Business Power Corp. and continuing growth in the hospital group.

In terms of contribution to the company’s net operating income: the power business accounted for P5.7 billion or 49 percent of total while the water segment contributed P2.7 billion or 23 percent.
Tollroads contributed P2.6 billion or 23 percent and the Hospital group contributed P443 million or 4 percent and the rail and systems group contributed P135 million or 1 percent.

“Our continuing earnings growth reflects significant volume increases for all our businesses together with our intense focus on operational efficiencies which have been achieved as a result of years of elevated capital expenditures. As such, while our earnings progress is encouraging our core annualized return on equity of 9.2 percent, which reflects our P149 billion of shareholders’ funds invested, requires further improvement,” said MPIC president and chief executive officer Jose Ma. Lim.

Although some of the operating companies chalked up lower core earnings, Lim said MPIC benefited from the big change in Manila Electric Co. (where interest was raised to 41.2 percent from 32.5 percent) and the takeover of Global Business Power Corp.

On the other hand, Meralco’s core net income for the first nine months decreased by 5 percent to P15 billion as an increase in electricity consumption was offset by lower distribution tariffs and the absence of the generation and transmission recoveries recorded in 2015.

For water, Maynilad Water’s 24-percent drop in nine-month core earnings to P2.7 billion was attributed to higher tax expense from expiration of its tax holiday holiday in December 2015, offset by a 4 percent increase in billed volume and 3 percent rise in average effective tariff.

The tollroads business grew core earnings by 20 percent to P2.4 billion attributed to surging traffic growth, cost controls, and new contributions from SCTEX and investee firm in Vietnam, CII B&R.

The hospital business grew core earnings by 39 percent to P443 million. Of the increase in core net income, 19 percent pertained to the contribution from new hospital acquisitions in 2016 while organic growth of 22 was driven by lower interest expense, cost savings from purchasing synergies and increasing patient revenues across the company’s existing hospitals.

“I expect continued volume growth for the rest of the year from all our businesses. We have seen encouraging post-acquisition performance at Global Power which offers us immediate attractive cash returns and solid medium term prospects,” Lim said.