MPIC ups income target to P5 billion as 9-month earnings rise 34%

MANILA, Philippines - Metro Pacific Investments Corp. (MPIC), the local flagship of Hong Kong-based conglomerate First Pacific Co. Ltd., has revised upward its core income target to P5 billion, driven by the robust performance across all its units which churned in a total P2.94 billion in earnings in the first nine months of the year, an increase of 34 percent from a year ago.

Consolidated reported net income, which reflects a net foreign exchange loss and non-recurring losses of P508 million, rose 33 percent to P3.44 billion on higher billed volume and tariffs from Manila Electric Co., as well as the strong performance of the Hospital Group.

The contribution of Metro Pacific Tollways Corp. (MPIC), declined slightly following the expiration of its income tax holiday at the end of 2010.

Maynilad Water Services Inc. accounted for 47 percent of aggregate core net income while Meralco chipped in P1.45 billion or 29 percent. MPTC, on the other hand, pitched in P1.04 billion or 21 percent of core net income while the Hospital Group contributed P166 million or three percent of total.

“All our companies, including MPTC on a pre-tax basis, have achieved strong growth in profitability during the first nine months of 2011 and the outlook for the year as a whole is equally positive. I am encouraged by the recent upturn, in the fourth quarter to date, of billed electricity volume by Meralco,” said Jose Ma. K. Lim, president and chief executive officer of MPIC.

MPIC chairman Manuel V. Pangilinan, for his part, said: “The positive results for the first nine months of this year were driven by continuing strong operating efficiencies, highly focused customer service and strict cost discipline at all our portfolio companies. Reflecting our strong operating results during the period and with greater visibility on full year results, we are guiding our core profitability for the year 2011 higher to P5 billion.”

The company was earlier targeting to post a profit of P4.8 billion this year.

Following a recent deal to acquire a controlling interest in Asian Hospital, MPIC continues to pursue new opportunities and increase investments in existing businesses, using the money raised from a recent equity offering.

Augie Palisoc Jr., head of the Hospital Group, said they continue to look for new acquisitions as the company aims to hit 3,000 beds in the next five years. The group is looking to expand its hospital network to 15 from the current six (including Asian Hospital).

“We’re talking to a number of hospitals, where we have no presence yet like Cebu, Iloilo, Cagayan de Oro and Gen. Santos. We’re also looking at a few in Metro Manila,” Palisoc said.

Palisoc said while the group has received offers to take over hospitals in Guam and was asked to look at bankrupt hospitals in Hawaii, it would rather concentrate on further expanding its footprint in the country.

Aggregate core net income for the Hospital Group in the nine months ending September this year stood at P409 million, up 16 percent from 2010.

For the water distribution business, Maynilad president and chief executive officer Ricky P. Vargas said they are eyeing a core net income of P6 billion this year, up 27 percent from the 2010 level.

Maynilad increased the volume of water sold to its customers by eight percent as its five-year, P36-billion capital expenditure program from 2008 to 2012 continued to deliver returns.

Non revenue water resulting from leakage and theft declined to 46.5 percent from 53.5 percent due to the continuing leak repairs program.

For the toll road business, MPTC is hoping to start construction of Segments nine and 10 next year and is hopeful that government would accept its $650-million proposal to undertake on its own the rehabilitation of the Metro Rail Transit Line 3 (MRT-3).

MPIC has already offered the government $300 million to expand the capacity of the MRT 3 and another $350 million for the acquisition of equity and some of the bonds issued by Metro Rail Transit Corp. (MRTC).

“The government is still discussing how to proceed with the MRT. We were told our proposal is being considered compared with other options they were previously considering. We should be favored because of the benefits we have outlined,” Lim said. 

Pangilinan said the group is also interested in looking at investments in the airport system, particularly the Manila international airport, Diosdado Macapagal International Airport and the Mactan Airport in Cebu.