MANILA -D.M. Consunji Inc (DMCI), one of the leading construction companies in the country, reported signs of demand recovery in the first quarter even as the overall environment remained challenging for builders.
DMCI order book expanded by 20 percent quarter-over-quarter to P42.4 billion at end-March from P35.2 billion with the awarding of the South Commuter Railway Project (Contract Package 02) to a DMCI-Acciona Construction Philippines joint venture.
The order book represents potential revenues that DMCI could recognize in its books in two to three years once as construction commitments are delivered.
Costing more than P28 billion, Contract Package 02 involves the construction of railway tracks and stations along España, Sta. Mesa and Paco. These will take roughly four and a half years to complete.
“DMCI’s participation in the joint venture is around 35 percent. In addition to construction revenues, we also expect to generate collateral business for our ready-mix concrete, equipment rental and steel fabrication units,” said DMCI president and CEO Jorge Consunji.
But compared with the same period last year, DMCI order book declined by 9 percent from P46.7 billion owing to the completion of several projects and the “descoping” or downsizing of North South Commuter Rail (NSCR) Contract Package 01, a joint venture with Taisei Corporation of Japan.
Current obstructions prevented access, possession, and handover of the NSCR construction site, resulting in the exclusion of work valued at P7 billion from the project pipeline.
Due to contentious right of way issues, the government shelved those specific sub-segments until such time that it could rebid and properly award them.
“We’re expecting equitable compensation for the descoping, which is a standard contract condition in construction projects. Negotiations are underway, and a resolution should be reached in the next few months,” added Consunji.
Aside from South Commuter Railway Contract Package 02, other projects in the DMCI order book include Dinapigue Causeway expansion, Xavier Junior High School Building, YCO Manila site early works and dredging and hauling of lagoon in the La Mesa Water Treatment plant.
For the first quarter, DMCI reported a standalone net income of P263 million, a 26-percent drop from P355 million last year because of lower construction accomplishment and fewer projects in the pipeline.
Private construction activities remain sluggish as high interest rates dampen property developers’ interest to build new malls and offices. At the same time, the exodus of Philippine offshore gaming operators (Pogos) has weighed down the property rental activities.