DMCI Holdings profit soars on units’ strong growth

DMCI Holdings, Inc. on Tuesday reported a core net income of P5.01 billion in the fourth quarter, up 145% year on year, bringing its full-year core earnings to P17.4 billion or higher by 164% from a year earlier.

Earnings growth last year was due to surging commodity prices, recovering electricity rates, and boosted productivity, the diversified engineering conglomerate’s stock exchange disclosure said.

“Nearly all of our subsidiaries grew triple digits in 2021 because of higher productivity and what we believe is the start of a commodities super cycle,” DMCI Holdings Chairman and President Isidro A. Consunji said.

Including nonrecurring gains, fourth-quarter net income rose 152% to P4.9 billion. For the full year, net income without one-off items grew 214% to P18.4 billion.

The diversified engineering conglomerate recognized a non-recurring income of P1 billion from deferred tax re-measurement arising from Republic Act No. 11534, or the Corporate Recovery and Tax Incentives for Enterprises Act.

In 2020, it recorded a nonrecurring loss of P708 million largely from sales cancellations for a real estate project.

Last year, Semirara Mining and Power Corp. (SMPC) and DMCI Project Developers, Inc. (DMCI Homes) accounted for 79% of core net income for the period.

Of DMCI Holdings’ subsidiaries, SMPC contributed P9.2 billion, a 360% upswing from P2 billion previously, following an increase in coal sales, average coal selling prices, and a hike in the average electricity selling prices.

Net income contributions from DMCI Homes more than doubled with a 127% growth to P4.4 billion from P1.9 billion on higher revenue recognition from accelerated construction accomplishments.

DMCI Mining Corp. recorded a 150% boost in its contributions to P1.2 billion from P483 million due to record-high shipments of nearly 2 million wet metric tons and a 40% increase in the average nickel selling prices.

DMCI Power Corp.’s share grew 8% to P580 million from P537 million due to the combined effect of higher electricity sales and lower fuel costs because of the commercial operation of its Masbate thermal plant.

D.M. Consunji, Inc. grew its contributions more than three times or 247% to P378 million from P109 million, owing to higher construction accomplishments and marginal pandemic-related expenses.

Meanwhile, coronavirus disease 2019 (COVID-19) restrictions translated to flat contributions from affiliate Maynilad Water Services, Inc. at P1.6 billion.

This year, DMCI Holdings said: “We expect intense volatility in the coal and nickel markets because of global supply disruptions and economic sanctions on Russia, the world’s third-largest and sixth-largest producer of nickel and coal, respectively.”

“While the escalation and prolonged aftermath of these sanctions will keep index prices elevated, possible policy interventions by China and Indonesia could create significant drawbacks for SMPC and DMCI Mining. Supply disruptions could also mean higher fuel expenses and raw materials costs for DMCI and DMCI Homes,” it added.

“Meanwhile, we expect our power and water businesses to benefit from the full economic reopening of the Philippines. Consumption should return to normal as companies and schools revert to on-site arrangements,” it added.

DMCI Holdings said its strong operating cash flow from higher commodity and electricity prices allowed it to pay out a total of P6.37 billion, or P0.48 per share, in special cash dividends last Nov. 10.

“This raised 2021 total cash dividends to P12.75 billion or P0.96 per share, which translates to a payout ratio of 194% — well above the company dividend policy of 25% of the previous year’s core net income and another all-time high for the group,” it added.

DMCI Holdings shares fell by 2.84% or 27 centavos to finish at P9.23 per share at the stock exchange on Tuesday. — Luisa Maria Jacinta C. Jocson