Meralco profit soars to P1.4B in first half

The Manila Electric Co. (Meralco) reported yesterday a substantial increase in its net income in the first half of 2004 of P1.4 billion, from only P66.09 million in the same period last year.

Meralco said the improvement in earnings was attributed to the 3.8-percent increase in the company’s sales volume during the period.

Meralco said the net earnings level enables it to bring its annualized return on rate base (RORB) of 6.9 percent after tax.

Despite achieving this level of net income, the company continues to be burdened by refund payments to its customers.

"At its face value the reported net income of P1.4 billion is a pittance compared to our financial obligations. This also includes the heavy burden the ongoing refund has on our financial position," Meralco vice president for corporate communication Elpi O. Cuna Jr. said.

Estimated cash outlay for customer refunds for the remainder of the year is at P2.4 billion and about P4.7 billion in 2005.

Meralco is also in the middle of finalizing a refinancing plan which will enable the power utility company to manage its debt obligations for the next two years. Its debt stoods at P24.2 billion as of June 30, 2004.

Of this amount, around P8.7 billion are due in the second half of the year, including short term debt amounting to P4.8 billion.

Cuna said that aside from its financial obligations and the refund payments, the company has to contend with its capital expenditure program

For this year alone the company is expected to spend around P5.75 billion for its capex.

"Our capital expenditure program is of primordial importance since this will ensure that our company will be able to provide the level of service expected by our customers," Cuna said.

From 1994 to 2002, Meralco invested P60 billion in plant and equipment to keep up with the growth in customers and demand.

Meralco’s net income for the same period of about P29 billion, however, was wiped out by the retroactive rate rollback ordered by the Supreme Court.

In its first semester report Meralco said that the commercial sector posted the highest growth rate at five percent over the same period last year, logging 4,226.98 million kilometers (kwh) followed by the residential class with 4,369.58 million kWh for a four percent growth.

The industrial sector showed a 2.3 percent rise at 3,360.87 M kwh while provision for streetlights however, dipped to 5.8 percent at 69.13 million kwh./30