Power, toll revenues drive stronger MPIC income in 2019

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The Pangilinan-led Metro Pacific Investments Corporation books ₱15.6 billion in core net income for 2019, lifted by strong power and toll road revenues while embattled Maynilad grapples with higher operating costs and an uncertain concession deal in Metro Manila.

Metro Manila (CNN Philippines, February 26) — Strong power and toll road revenues drove Metro Pacific Investments Corporation's bottom line to a record high, the listed firm said Wednesday.

The holdings company chaired by businessman Manny Pangilinan reported a core net income of ₱15.6 billion for 2019, 4 percent higher than what it made the prior year.

Its power businesses accounted for 55 percent of the conglomerate's profit, MPIC said in a disclosure. Meralco, the biggest power distributor in the country, booked ₱23.8 billion for the year amid growth in energy sales, higher investment returns, and lower borrowing costs for its debts. In particular, cheaper fuel and a stronger peso allowed the company to enjoy a 5 percent lift in revenues to ₱318.3 billion.

Meanwhile, its subsidiary Global Business Power netted ₱2.7 billion with higher margins from the electricity spot market, as well as additional supply from its power projects.

Metro Pacific Tollways saw net income climb by 18 percent to ₱5.3 billion, driven by higher traffic along domestic roads and tariff adjustments for the North Luzon, Subic-Clark-Tarlac, and Cavite expressways which the group operates. Road construction and expansion projects worth ₱105.3 billion are set for completion in the next three years.

The listed conglomerate poured ₱72 billion in additional capital for all its businesses last year.

MPIC said it is also expecting to spend ₱25 billion for its proposed Cavite-Tagaytay-Batangas Expressway, which would soon be subject to a Swiss challenge to consider counter-proposals from other infrastructure companies.

MPIC's healthcare unit Metro Pacific Hospital Holdings also reported a ₱2.7 billion core income, up 14 percent year-on-year. This subsidiary welcomed a ₱35.3-billion investment from two foreign firms, shelving its ₱75-billion plan to go public.

Meanwhile, net income of west zone concessionaire Maynilad stood flat at ₱7.7 billion, as higher operating costs flushed out the effect of bigger water tariffs and service connections. MPIC cited the unfavorable ruling of the Supreme Court in August, which slapped a near ₱1-billion fine for its supposed failure to set up sewerage systems for its service areas in Metro Manila.

Maynilad also pointed out that it forfeited the ₱3.4 billion due from the government after President Rodrigo Duterte blasted water firms for charging losses incurred to the state. Duterte has also ordered to terminate contract extensions with Maynilad and its counterpart Manila Water to 2037, leaving the utility company's future beyond 2022 uncertain.

READ: Manila Water, Maynilad will not increase water rates in January 2020

"The continued expansion in our overall service coverage and attempted constructive engagement on tariffs has not endeared us to the government, which now deems various long-established and operationalized contracts as having onerous provisions," the group's President and Chief Executive Officer Jose Ma. Lim said in a statement.

Lim acknowledged the recent fall in MPIC's stock price amid "sharply higher risk premiums" regarding contracts with government. He added that Maynilad could not afford to pay dividends due to this development.

On the other hand, MPIC expects to rake in more profits from its new water supply deals in Iloilo and Dumaguete City.

MPIC's train operations arm Light Rail Manila Corporation, a joint venture with Ayala Corporation, generated ₱319 million, but has been reinvested for the development of the Light Rail Transit Line 1. The group deployed ₱8.4 billion to rehabilitate the train line and to fund the extension of the service to Cavite.

MPIC's logistics and other businesses brought in a ₱352-million loss to the holding firm. Still, the listed holding company said it will pay cash dividends at ₱0.076 per share, to be paid March 20. A share buyback program has also been rolled out for cases when MPIC's stock is "substantially undervalued, or if there's high volatility in the stock market.

Shares at MPIC ended at ₱2.97 apiece, down 2.94 percent from the previous day's closing rate.