MPIC jump-starts spending, but Ukraine war threatens income goals
Infrastructure conglomerate Metro Pacific Investments Corp. (MPIC) is set to resume robust capital spending this year while core earnings are expected to grow, albeit not in the same pace seen previously amid challenges arising from the Ukraine crisis.
MPIC grew its 2021 core income by 20 percent to P12.3 billion, hitting the company’s target. Attributable net profit last year more than doubled to P10.1 billion following gains recognized from the sale of shares in power generation firm Global Business Power and Thai toll road operator Don Muang Tollways (DMT).
This year, MPIC would likely grow its core earnings in the high single-digit level to low double-digit level, MPIC chief financial officer Chaye Revilla said at a press briefing on Wednesday.
She said MPIC could not give specific earnings guidance given the impact of the Ukraine crisis on some of the group’s businesses.
“We grew by 20 percent in 2021 versus 2020 when the pandemic was at its fullest. But for 2022, we’re anticipating a rather stable growth—maybe close to but not as high as 20 percent,” Revilla said.
She said the group would have to take a look at the impact of the Ukraine crisis, not just on global oil prices but on local inflation.
P136-B capital expenditure
This year, MPIC has earmarked P136 billion for group-wide capital spending, which Revilla said had already exceeded outlays seen before the pandemic. This also represents a huge increase from the P78-billion capital expenditure last year.
Including other local businesses under the First Pacific group like PLDT, Philex Mining and Roxas Holdings, MPIC chair Manuel V. Pangilinan said total spending last year amounted to P169 billion. This year, First Pacific group spending would grow further to P215 billion, Revilla added.
Within the MPIC group, the biggest budget will be for the power business with P57 billion, followed by toll roads with P32 billion. The water business under Maynilad Water Services will have a budget of P12 billion to P14 billion, while the railway business will have an allocation of about P6 billion.
Impact on toll road business
In 2021, core income grew by 20 percent, a substantial improvement from the 13-percent growth in the first half, largely driven by improved traffic on toll roads and higher volume of electricity sold by Manila Electric Co. (Meralco)
On the impact of oil prices breaching the $130 barrel per level, Pangilinan said this could gnaw on the toll road business. “It could impact the traffic volume if it’s more expensive to use your cars or trucks to travel … and I think the country uses very little bunker fuel.”
There would likewise be an adverse impact for consumers in terms of higher electricity rates, but Pangilinan said this won’t affect Meralco’s earnings that much because the utility firm was not making margins from generation or other charges passed on to consumers.
Philex Mining, meanwhile, would benefit from lofty metal prices, he added.
