MPIC net profit up 91% to P1.57B in Q1

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MANILA, Philippines—Infrastructure holding firm Metro Pacific Investments Corp. grew its first-quarter net profit by 91 percent year on year to P1.57 billion as its power and water distribution businesses jacked up revenues by a double-digit level.

Excluding one-off items, three-month core net profit went up by 40 percent to P1.59 billion. “The full-year earnings outlook is encouraging and I believe it appropriate to guide our shareholders towards full-year core net income of up to P6 billion,” said MPIC chairman Manuel V. Pangilinan.

The rise in core net income is due mainly to higher profit contributions from Maynilad Water Services Inc. and from Manila Electric Co., as well as the benefit from recent investments in the hospital group together with lower interest costs at MPIC parent company.

“The strong results for the first quarter reflect significant service level improvements and efficiency gains for all our operating companies,” Pangilinan said. “We are striving to accelerate momentum in our new projects.”

MPIC president Jose Ma. Lim explained that core income grew at a faster pace due to significantly lower interest expense attributable to interest earnings from higher cash balance and the conversion of P6.6 billion bonds into equity. “That cash is now earning interest and combined with the funds raised in the middle of last year, which has resulted in 78 percent reduction in interest expense,” Lim said.

The non-recurring expenses also declined because the value added tax credits that tollway unit Metro Pacific Tollways Corp. used to accumulate have been used to pay liabilities, thereby eliminating the need to set aside VAT provisioning.

In the first quarter, Maynilad accounted for P862 million, or 46 percent of total contribution to core net income, representing MPIC’s attributable interest in the company. Meralco contributed P534 million, or 28 percent, while MPTC delivered P367 million, or 19 percent of core net income. The hospital group contributed P124 million, or 7 percent of the total.

“All our businesses achieved strong growth in profitability for the first quarter. We are well placed for continued growth in the rest of 2012, and I am encouraged by the generally buoyant economic conditions we are enjoying” Lim said.

MPIC’s share in the income of operating companies was mainly driven by the following:

* 10.1 percent rise in billed volume and 9.6 percent increase in all-in tariff at Maynilad;

* 10 percent increase in energy sales and impact of increased ownership at Meralco; and

* strong performance from Makati Medical Center, increase in ownership at Cardinal Santos and acquisition of Asian Hospital.

The P6-billion core profit guidance for this year, MPIC chief finance officer David Nicol said, would be supported by extra billed volume from Maynilad together with increased holdings in Manila Electric Co., expansion in the hospital business and low interest bill for the year.