Meralco core income up nearly 19% on higher energy sales

MANILA Electric Co. (Meralco) reported an 18.6% increase in core net income to P7.46 billion for the second quarter of the year from P6.29 billion a year ago on strong energy sales and contributions from its power generation business.

“Sales volume was maintained at 6%, with continuing contributions from PacificLight, San Buenaventura and BulacanSol,” said Meralco Senior Vice-President and the Chief Finance Officer Betty C. Siy-Yap during a virtual media briefing on Monday.

She was referring to the company’s power generation units PacificLight Power Pte. Ltd., San Buenaventura Power Ltd. Co., and PowerSource First Bulacan Solar, Inc.

Reported net income during the second quarter rose 34.6% to P7.56 billion from P5.62 billion previously, factoring in one-off items such as the impact of the Corporate Recovery and Tax Incentives for Enterprises Act and foreign exchange gains.

“Things are looking good,” Ms. Siy-Yap said on the company’s profit outlook for the rest of the year.

For the first half, Meralco’s consolidated core net income increased by 14.8% to P13.09 billion from the P11.4 billion recorded in the same period last year.

Reported net income increased by 31.9% to P13.12 billion from P9.95 billion a year ago.

“Energy sales surpassed pre-pandemic levels,” Meralco Chief Commercial Officer Ferdinand O. Geluz said. “Energy sales increased by 6% … driven by double-digit growth from [the] commercial segment.”

Energy sales in the first half reached 23,968 gigawatt-hours (GWh) from 22,663 GWh a year ago.

He said the improvement was the effect of the continuing economic reopening with the easing of mobility restrictions in Metro Manila.

“This first half … sales are 5% higher than 2019 which is our pre-pandemic sales,” Mr. Geluz said.

The company also reported a 3% increase in its customer count to 7.52 million as of the first half from 7.27 million a year earlier.

“This was driven by record-high energization of project-covered and ordinary service applications mostly from mixed-use buildings, subdivisions, and telecommunications customers,” the company said in a press release.

The average retail rate increased by 18% to P9.33 per kilowatt hour, which is mainly caused by the 30% increase in generation charges due to higher fuel costs, peso depreciation, and higher spot market prices.

“To this end, Meralco relentlessly looks for ways to cushion the impact of external volatilities on our operations. We will move ahead with the execution of sourcing strategies that include our planned CSPs (competitive selection process), consistent with our power supply procurement plan, in a timely manner to ensure availability of cost-competitive power for our customers in the long-term,” Meralco President and Chief Executive Officer Ray C. Espinosa said.

In the press release, the company said consolidated revenues rose 34% to P199.6 billion from P149.1 billion mainly “due to the higher pass-through generation and other charges on account of persisting increase in global fuel prices, as well as the revenue contribution of the power generation business which was at P13.6 billion.”

Power generation subsidiary Meralco PowerGen Corp. (MGen) contributed P2.3 billion to Meralco’s core income in the first half, surging from P311 million a year ago.

The growth was largely driven by the earnings of Singapore-based PacificLight, which recorded a core net income of P5.7 billion, turning around from a P231-million net loss in the same period last year.

The 455-megawatt (MW) supercritical coal-fired plant of San Buenaventura in Mauban, Quezon recorded a first-half core income of P1.5 billion.

Meanwhile, BulacanSol’s 55 MW of alternating current in San Miguel, Bulacan had a core income of P186 million as of end-June.

As of the first half, MGen had a total power generation capacity of 2,251 MW.

In the press release, Meralco Chairman Manuel V. Pangilinan said: “While uncertainties and risks remain, we expect that our country will raise the pace of economic recovery under the new government of President Ferdinand Marcos, Jr.”

“Meralco will be ready to support the growing power requirements of our customers and the government’s ramped-up infrastructure projects and initiatives to help our nation weather the lingering impacts of the pandemic and push forward,” he added.  

Mr. Pangilinan said he remains optimistic that the company will be able to sustain its financial performance throughout the year “and deliver our commitment to our customers and shareholders as we pursue investments aimed at further improving our distribution infrastructure and services, building new power capacities to improve aggregate power supply — all to ensure the country’s long-term energy security.”

“In this regard, Meralco will work closely with the government of President Marcos and private sector partners towards a united, more resilient, and stronger Philippines,” he said.

On the stock exchange, shares in Meralco finished unchanged at P354.00 apiece.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc.

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