Meralco income plunges 31% to P1.12B in Q2

Manila Electric Co. (Meralco), the country’s largest privately-owned power distributor, reported yesterday a 31.2-percent drop in net income to P1.12 billion in the second quarter of 2006 from P1.62 billion in the same period last year.

In a statement, Meralco said its earnings in the second quarter, however, was an improvement from the P748-million net loss incurred in the first quarter of the year.

Thus for the first six months of 2006, Meralco made a turnaround to an income of P367 million, from a net loss of P583 million in the same period last year.

The company said earnings should have been higher were it not for the continuing provisioning for probable losses related to the firm’s rate unbundling case still pending with the Supreme Court.

Revenues registered at P47.89 billion in the second quarter, representing a 2.7-percent and 15.1-percent jump compared to the same period in 2005 and the first quarter of this year, respectively. For the six-month period, revenues increased by 7.8 percent to P89.51 billion.

Total expenses during the second quarter increased 4.7 percent to P46.23 billion compared to P44.16 billion a year earlier. The six-month figure registered a 6.5-percent increase to P89.05 billion. Major components of these expenses were purchased power, operations and maintenance and depreciation.

Capital expenditures in the quarter increased 10.08 percent to P1.09 billion. As of June 30,2006, total capex went up by 5.4 percent to P2.15 billion.

Due to inclement weather, shorter billing days and the suspension of the One Day Power Sales (ODPS) program, sales of over one gigawatthour (gwh) contracted slightly by 0.43 percent to 6,501 gwh in the first half of 2006

Of the three major customer segments, the commercial segment led the growth in sales with a respectable 2.13 percent increase during the second quarter, driven by the retail trade sub-segment which grew 14.42 percent, followed by transport services and real estate at 12.84 percent and 3.45 percent, respectively.

Meralco said the retail trade’s growth was attributable to the operations of new and existing shopping malls within the company’s franchise areas. The opening last may of the Sy-owned SM Mall of Asia, the energization of SM SuperCenter and the full operations of SM Sta. Rosa largely contributed to this sub-segment’s sales surge.

Increased grid consumptions of NAIA Terminals 1 and 2 (due to the breakdown of their gensets) and the energization of NAIA Terminal 3, on the other hand, contributed to the rise in the consumption of transport services.

Meanwhile, the steady operations of call centers and other IT-related businesses continued to fuel growth in the real estate sub-segment.

Notwithstanding the erratic availability of the ODPS program in the latter part of May until June 2006 brought about by low generation reserve and the opening of the wholesale electricity spot market (WESM), industrial sales modestly grew by 1.23 percent over the same quarter last year.

Cement, plastic products, and electrical machinery manufacturing were the main growth drivers, increasing by 23.25 percent, 10.18 percent and 4.3 percent, respectively. Major cement manufacturers, in particular, continued to avail of the ODPS program starting the third quarter of 2005 while increased market demand for plastic products, as reported in the previous quarter, sustained its way into the first half of 2006, leading to the increased operations of plastic manufacturing companies which supplied plastic packaging requirements, both locally and overseas.

Residential sales, however, pulled down overall sales, declining 4.21 percent in the second quarter of 2006. This was due to power interruptions caused by inclement weather (Typhoon Caloy) in May and energy conservation efforts in response to increasing price of electricity and other basic commodities.