MANILA, Philippines — Power distribution giant Manila Electric Co. (Meralco) expects to post at least a mid-four percent growth in sales volume this year – closely matching that of last year – on the back of steady power demand despite headwinds.
The company may end the year with about 4.5 to five percent growth in sales volume, Meralco president Oscar Reyes said.
“I think we have to see what the final November and December figures are, but call it 4.5 to five percent growth from last year,” he said.
This is despite coming from a high base, as well as demand and economic headwinds that temper energy sales.
Within its franchise, Meralco’s energy sales is challenged by the increase of energy efficiency products consumers buy.
The elasticity of demand growth compared to the growth of gross domestic product keeps on declining. Before, it was 1.3 in the ’90s, now we are doing about 0.75 percent growth in electricity for every one percent growth in GDP,” Reyes said.
“That’s good because consumers are able to save. Even if it means lower volume for us, whatever is good for consumers will be good for Meralco,” he said.
Adoption of solar rooftop in the residential and industrial segments has also tempered the firm’s sales.
“It means they will be getting less from the grid and effectively generate their own,” Reyes said.
The company official also noted that last year, sales surprisingly rose due to higher temperature bolstered by a low inflation and low exchange rate environment.
But this year, the interest rates, exchange rates and inflation rate are higher, which tempers demand, Reyes said.
In October, Meralco registered a five percent growth in energy sales in the residential sector, which accounts for 92 percent of the total franchise.
“Compared to 2017, I think because of this volume growth, we expect slightly better bottomline,” Reyes said.
This supports the earlier comment of Meralco chairman Manuel V. Pangilinan that the power distributor is seen to hit a historic number for the full-year due to a robust nine-month performance.
As of end-September, Meralco posted a nine percent rise in core net income from P15.4 billion last year to P16.7 billion this year, while net income jumped 14 percent from P15.9 billion to P18.2 billion.
Total revenue rose six percent from P214.4 billion to P227.4 billion, still largely driven by energy sales of its distribution business.
Meralco registered a 4.8 percent increase in energy sales to 32,921 gigawatt-hours (gwh) and customer count expanded by 4.7 percent to 6.54 million.
Last year, Meralco’s consolidated energy sales volume expanded by five percent to 42,102 gwh in 2017, which pushed core net income higher by three percent to P20.2 billion and net income by six percent to P20.4 billion.