MPIC sees higher toll, utility rates driving earnings growth this year

MANILA, Philippines - Infrastructure conglomerate Metro Pacific Investments Corp. (MPIC) is banking on rate increases in its tollroad and utilities businesses to drive up its profits this year.

Expansion plans, which include a P70-billion capital spending for the water distribution business, are geared towards increasing its customer base, company executives said yesterday.

“We are experiencing strong volume growth. For the tariffs, if we can get the toll rate increase and if we can get Maynilad Water Services Inc.’s rate rebasing, then we should be looking good for this year,” MPIC president and CEO Jose Ma. K. Lim told reporters.

In April alone, sales volume of utilities Manila Electric Co. (Meralco) and Maynilad rose nine percent and six percent, respectively, while traffic volume of Metro Pacific Tollways Corp. (MPTC) picked up eight percent, Lim said.

In the first quarter, core profits of MPIC jumped 23 percent to P1.9 billion while reported net income rose 13 percent to P1.8 billion from a year ago.

MPIC expects the rate increases to push its net income higher than the P6.5 billion in 2012 and P5.1 billion in 2011.

“For the toll roads, it was delayed because of the elections that prevented the government from implementing it,” Lim said.

Higher toll rates for the 84-kilometer North Luzon Expressway should have been effective early this year.

The rate rebasing exercise for Maynilad is ongoing, with MPIC expecting to increase its distribution rates in July, Lim said.

For Meralco, Lim said MPIC is benefiting from slightly higher distribution rates.

In the first three months, MPIC recorded higher volumes and tariffs for Meralco and Maynilad; strong traffic growth for MPTC; and cost reductions and higher patient revenues for the healthcare group.

For its expansion projects, the conglomerate announced a P70-billion capital spending for Maynilad.

“Across our portfolio of four businesses, we do have great prospects in front of us,” said MPIC chief finance officer David J. Nicol.

“Over the next five years, capital expenditures will be P70 billion,” Nicol said.

Nicol said MPIC already filed its business plan to regulators. Under the business plan, Maynilad’s capital spending will be recouped through certain tariffs that will be set by regulators.

West Zone concessionaire Maynilad aims to add 150,000 new connections, Nicol said.

In the first quarter, billed volume of Maynilad inched up two percent as the number of customers climbed six percent to 1.08 million as of end-March compared with a year ago.

For the healthcare group, Lim said MPIC will acquire two hospitals this year: the De Los Santos Medical Center in Quezon City and another in the province of Tarlac.