METRO Pacific Investments Corp. expects a tougher second quarter due to the impact of the new coronavirus disease 2019 (COVID-19) pandemic that placed Luzon under an enhanced community quarantine (ECQ) since mid-March.
The company yesterday reported profit of P1.89 billion for the first quarter of the year, down 46.61 percent from last year’s P3.54 billion.
Revenues dropped 6 percent to P87.8 billion
from P93.4 billion a year ago.
The company said core profit fell 6 percent to P3.4 billion from P3.7 billion, “owing largely to the economic contraction stemming from the Philippine government ‘s work to contain the spread of the COVID-19 pandemic through an ECQ launched late in the first quarter.”
It added the ECQ reduced toll road traffic, suspended rail services and decreased commercial and industrial demand for water and power resulting in a decrease in contribution from operations of 5 percent.
“The 5-percent reduction in contribution from operations, which we attribute to the ECQ, will accelerate in the second quarter as the ECQ has been lengthened. Meanwhile, overheads have been reduced and interest held flat resulting in our first quarter Core Net Income falling by a modest 6 percent (our first ever) compared with a year ago,” said Jose Ma. Lim, Metro Pacific president.
Manuel Pangilinan, Metro Pacific chairman, said the company’s tack nowadays is to be “financially prudent” while focusing on existing operations and business portfolio of the group in order to tide the impact of the COVID-19.
Pangilinan said the group has “no energy to look into new projects” as a result of the COVID-19 which he called a “perfect storm” due to its unexpected impact on the economy.
David Nicol, Metro Pacific chief finance officer, said the company is reducing its planned capital expenditure by half at P80 billion, compared to an earlier planned P160 billion, amid an expectation of an improvement in the environment by the second half of the year.
According to Nicol, the company has cut on all discretionary initiatives, including an earlier planned venture into tourism in partnership with Dusit International of Thailand as part of financial prudence.
Nicol said the second quarter will “inevitably be hard hit” of the coronavirus pandemic as it covers most of the ECQ’s implementation period.
Still, he said the company hopes to be profitable in the next three months of the year but “much, much reduced the first quarter of last year” as business volume takes time to build after the ECQ is lifted.
For the first quarter of the year, Metro Pacific’s power generation business posted a core profit of P2.9 billion, up 7 percent, driven largely by unit Global Business Power Corp. (GBPC) and lower borrowing cost in Beacon Electric Holdings Inc.
GBPC grew core profit by 10 percent to P439 million as it posted volume recovery from maintenance shutdowns in 2019 and higher contribution from subsidiaries.
Manila Electric Co.’s reported profit meanwhile was down 54 percent to P2.6 billion, though the company noted its core profit was up 2 percent at P5.7 billion, driven by a 9 percent increase in distribution revenues and higher contribution from subsidiaries.
The toll road business had unit Metro Pacific Tollways Corp. (MPTC) post core profit of P900 million, down 18 percent from P1.1 billion a year earlier, as a result of lower traffic on all roads due to the implementation of the ECQ as well as higher interest costs on increased borrowings.
MPTC’s system-wide vehicle entries, covering both domestic and regional road networks, averaged 844,847 a day, down from 914,232 in 2019.
The water business reported core profits of P900 million through MetroPac Water Investment Corp. (MPW), most of it from unit Maynilad Water Services Inc.
Maynilad’s core profit rose 12 percent to P1.6 billion, as revenues hit P5.7 billion with increased billed volume being offset by lower average tariff.
Outside the Maynilad concession which currently bills approximately 1,500 million liters per day, it continues to operate and deliver water during the ECQ through a skeleton workforce in Laguna, Iloilo and Cagayan de Oro as well as its international operations in Vietnam.
Under the rail business, unit Light Rail Management Corp. posted a core profit of P180 million, down 19 percent. Average daily ridership for the period was at 422,703, 9 percent lower from 463,758 last year.
The group’s logistics business under Metropac Movers Inc. (MMI) is set to start construction of a dry goods and refrigerated warehouses facility on a 52,000 square meter site located along the Sta. Rosa-Tagaytay Road, some 2 kilometers from the South Luzon Expressway, the company said.
Originally targeted to open in the second quarter of 2021, this project’s timetable is now under review due to ECQ.
Metro Pacific said MMI is not yet contributing positively to its core net income but following an extensive restructuring in 2019, it expects better looking ahead.
Moreover, the significant disruption in supply chains during the COVID-19 crisis indicates potentially increased opportunity in developing high quality large warehouses, the company added.
