COVID-19, ECQ drag MPIC net income down by 6% to P3.4B in Q1

Infrastructure conglomerate Metro Pacific Investments Corp. (MPIC) saw a 6% decline in its core net income in the first quarter of the year, dragged by the halt in economic activities amid the enhanced community quarantine to contain the coronavirus disease 2019 (COVID-19) spread.

In a statement on Wednesday, MPIC said its consolidated core net income stood at P3.4 billion from January to March, down by 6% from P3.7 billion year-on-year.

The decline in bottom line was owed “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.”

The company noted that 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%.

Power accounted for P2.87 billion or 62% of net operating income; toll roads contributed P920 million or 20%, and water contributed ?860 million or 18%.

Contributions from hospitals, rail, logistics and other businesses offset each other, according to MPIC.

Consolidated reported net income attributable to owners of the parent company was P1.9 billion for the first three months of 2020, down from P3.5 billion a year earlier due to the provisioning in full of the carrying value of Manila Electric Co.’s investment in Pacific Light Power, a gas-fired power plant in Singapore.

MPIC recorded a non-recurring expense of P118 million a year earlier primarily due to refinancing and share issuance costs plus various project expenses.

“The robustness of our operations, even in these difficult times, reflects a decade and more of sustained capital investment. However, it is our talented management and thousands of dedicated front-line employees who deserve our gratitude in these trying times,” said Jose Ma. K. Lim, president and CEO of MPIC.

"The benefits of the continued expansion in our overall customer coverage manifested early in the first quarter through increased volumes ahead of the implementation of the ECQ, and since the ECQ, in increasing service standards despite the restricted operating environment. The 5% 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% (our first ever) compared with a year ago,” Lim said.

The MPIC chief said the company’s immediate priority is preserving cash.

“MPIC itself is well funded due to the P30.1 billion sell down of our interest in our Hospitals Business at the end of 2019. We moved to suspend our previously announced share buyback and other discretionary projects,” Lim said.

“As earlier reported, Maynilad is currently unable to pay a dividend pending the outcome of the Concession Agreement review, and as a result of the ECQ and other consequences of the COVID-19 outbreak, we may expect lower dividends from our power and toll roads businesses for 2020,” he added.

Lim said it was too early to give either earnings or capital expenditure guidance for the full year 2020 due to the uncertainty surrounding the recovery from the COVID-19 containment measures and various ongoing regulatory reviews. -MDM, GMA News