DMCI earnings hit record on commodities surge
A global commodity “supercycle” catapulted Consunji-led DMCI Holdings’ net profit last year by 214 percent to an eight-year high of P18.4 billion, beating prepandemic earnings level and market expectations.
Excluding nonrecurring items, DMCI’s full-year core net income soared to a record-high P17.4 billion, up by 164 percent from the previous year. Apart from surging commodity prices, recovering electricity rates and higher construction accomplishments accounted for the spectacular growth.
DMCI’s 2021 profit exceeded the P10.5-billion net profit booked by the diversified engineering conglomerate in 2019, the last year before the COVID-19 pandemic erupted. It also beat the P17.1-billion earnings that the market expected the conglomerate to deliver, based on Bloomberg consensus.
The headline net profit marked the second highest income level chalked up by DMCI. The highest bottom line level was seen in 2013, when it racked up P18.94 billion following the sale of a 16-percent stake in Maynilad Water Services to Marubeni of Japan.
For the fourth quarter 2021 alone, DMCI Holdings saw a 145-percent year-on-year growth in core earnings to P5 billion. Meanwhile, net income climbed at a faster pace of 152 percent to P4.9 billion.
“Nearly all of our subsidiaries grew triple digits in 2021 because of higher productivity and what we believe is the start of a commodities supercycle,” said DMCI Holdings chair and president Isidro Consunji, suggesting an upswing in the commodity cycle for a prolonged period.
Record coal prices
Newcastle coal prices reached an all-time high of $269.50 in October last year while LME nickel hit a 10-year high of $22,145 in September.
“This year, we expect extreme volatility in coal and nickel prices because of the ongoing crisis in Ukraine, economic sanctions on Russian and possible policy interventions of China and Indonesia,” added Consunji.
Last year’s headline earnings included a nonrecurring income of P1 billion, mostly from deferred tax remeasurement under the Corporate Recovery and Tax Incentives for Enterprises Law and nonrecurring loss of P708 million mainly from sales cancellations for a real estate project in 2020.
Biggest earnings driver
Semirara Mining and Power Corp. was the biggest driver of DMCI’s earnings last year, contributing P9.2 billion—a whopping 360-percent increase from the previous year. This was, in turn, attributed to a 16-percent increase in coal sales, 71-percent jump in average coal selling prices and 49-percent hike in average electricity selling prices.
Net income contributions from real estate arm DMCI Homes surged by 127 percent to P4.4 billion last year on higher revenue recognition from accelerated construction accomplishments.
DMCI Mining also recorded a 150-percent boost in contributions to P1.2 billion on record-high shipments of nearly 2 million wet metric tons and a 40-percent increase in average nickel selling prices.
Contribution from DMCI Power hit P580 million, rising by 8 percent, due to the combined effect of higher electricity sales and lower fuel costs because of the commercial operation of its 15-megawatt Masbate thermal plant.
Construction arm D.M. Consunji Inc. grew its contribution by 247 percent—more than three times—to P378 million owing to higher construction accomplishments and marginal pandemic-related expenses.
Meanwhile, lower billed volume (-3 percent) and average effective tariff (-1 percent) because of COVID-19 restrictions resulted in a flat contributions from affiliate Maynilad Water Services, Inc. at P1.6 billion.
Income from parent firm and others recovered to a net income of P11 million from a net loss of P51 million in the absence of expenses related to COVID-19 versus the level in 2020. INQ
