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UPDATE 1-Manila Electric Q2 profit up 39 pct
July 25, 2011 / 8:21 AM / 6 years ago

UPDATE 1-Manila Electric Q2 profit up 39 pct

* Q2 net income 3.96 bln pesos vs 2.84 bln pesos yr ago

* 2011 core income seen up 15 pct at 14 bln pesos

* Eyes borrowing to fund power generation project (Recasts to show Q2 earnings, adds more comments)

MANILA, July 25 (Reuters) - Manila Electric Co (Meralco) , the Philippines’ largest power distributor, posted a 39 percent rise in quarterly profit, helped by higher distribution charges, and expects to grow its core income by 15 percent this year.

Meralco, partly owned by San Miguel Corp and indirectly by the First Pacific Group , said it had net income of 3.96 billion pesos ($93 million) in the June quarter, compared with 2.84 billion pesos in the same period in 2010.

Analysts had expected net income of 3.3 billion pesos for Meralco in the second quarter, according to consensus estimates from Thomson Reuters I/B/E/S.

First-half net income climbed 25.6 percent to 6.09 billion pesos. Core income, which strips out currency and derivatives-related items, climbed 34.7 percent to 7.8 billion pesos.

Meralco, whose power sales are often used by analysts as a barometer of economic activity, said energy sales in the first half fell 1 percent to 14,781 gigawatthours due to cooler weather.

The company said it expects core net income to rise 15 percent this year to 14 billion pesos.

Meralco’s profit guidance assumes electricity sales in the second half would be broadly similar to that in the first six months, said Meralco President and Chief Executive Manuel Pangilinan.

It also reflects slightly lower distribution charges based on the recent tariff ruling of the Energy Regulatory Commission, he said.

“We see lower core earnings in the second half than in the first. We are, of course, taking initiatives to raise electricity sales in the second half to boost core income for the whole year,” Pangilinan said at a news briefing.

Analysts forecast net income of 17.7 billion pesos for the full year, consensus estimates from Thomson Reuters I/B/E/S show.

Meralco is looking to build power plants with a total capacity of 1,500 megawatts over the next five years, and may spend an estimated $2.3 billion, to fill an expected increase in power demand in coming years.

It signed an agreement with Aboitiz Power Corp and Taiwan Cogeneration Corp on Friday to put up a 600 MW coal-fired power plant in the Subic Bay Freeport Zone in Zambales province, north of Manila.

That project, to be funded with debt and equity, will be undertaken by Redondo Peninsula Energy Inc, in which Meralco now has a majority stake. Commercial operation of the plant is expected to start in 2014.

RP Energy is looking to raise 39 billion pesos via a syndicated loan deal with banks to finance the project.

Shares of Meralco lost 0.7 percent on Monday in a market that was largely flat. The stock has climbed more than 22 percent this year, outpacing a gain of more than 6 percent in the main index. ($1 = 42.410 Philippine Pesos) (Reporting by Erik dela Cruz; Editing by Vinu Pilakkott)

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