MPIC Q1 net income down 7%

Infrastructure holding firm Metro Pacific Investments Corp. saw a 7-percent year-on-year decline in first quarter net profit to P3.5 billion on higher debt servicing from increased investments.

Excluding nonrecurring items, MPIC’s first quarter core net income  improved to P3.7 billion from P3.6 billion in the same period last year on higher earnings contribution across its power, toll road, water, hospital and railway businesses.

“We are seeing partial resolution of our long-pending tariff issues, particularly in our water and tollways businesses. However, the shape of such resolution takes the form of staggered tariff increases and concession extensions, which makes us front-end the financing of our current expansion programs for tollways and water, and consequently pay upfront the financing costs associated with these. Accordingly, the increase in our operating results has been largely absorbed by higher interest costs during the first quarter,” said MPIC chair Manuel V. Pangilinan in a disclosure to the Philippine Stock Exchange on Thursday.

MPIC president Jose Ma. Lim said the 8-percent growth in contribution from operations reflected meaningful volume increases for most businesses.

Energy sales in Luzon rose by 2 percent year-on-year, although in the Visayas, volume was down by 8 percent. For toll roads, system-wide road traffic rose by 8 percent while the volume of water sold in West Metro Manila grew by 2 percent.  The hospital group grew its volume by 10 percent.

“The rise in our borrowing costs has largely offset the increased operating contribution as we continue to make significant investments in new road, water, energy and logistics projects. These will take some time to complete and begin contributing to earnings,” Lim said.

Progress on long-running differences with regulators over tariffs is helping MPIC’s bottom line, Lim said. Following a constructive and professional water rate rebasing in 2018, MWSS approved a 5.7-percent inflation-linked tariff increase on Jan. 1. “This is good news, but unfortunately, the rebasing didn’t address the corporate income tax recovery issue inherited from the previous administration, which we continue to pursue,” Lim said.

Power accounted for P2.7 billion or 54 percent of MPIC’s net operating income for the first quarter. Toll roads contributed P1.1 billion or 23 percent and water contributed P900 million or 18 percent. The hospitals group contributed P242 million or 5 percent, while the rail, logistics and systems group contributed P7 million.

Contribution from MPIC’s power business grew by 10 percent, driven by strong results at Manila Electric Co., which more than offset the decline in contribution of Global Business Power Corp. Meralco’s core net income for the first quarter of 2019 rose by 14 percent to P5.6 billion as slightly lower tariffs perked up sales while lower interest expense from lower debt balance and higher yield from cash placements boosted earnings.—DORIS DUMLAO-ABADILLA