Release Date: October 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Manila Electric Co (PHS:MER, Financial) reported the highest third-quarter results with a 4% increase in sales volume and a 17% year-on-year increase in CCNI, reaching PHP35.1 billion.
- The company's distribution utility business saw a 7% increase in volume, with residential and commercial volumes increasing by 10% and 8%, respectively.
- S&P upgraded Manila Electric Co's long-term credit rating to BBB, citing strong financial performance and stable cash flows.
- The company completed significant capital expenditure projects, including the installation of a new power transformer and the commissioning of new substations, enhancing service reliability.
- Manila Electric Co maintained its inclusion in the FTSE4Good Index for the fourth consecutive year, reflecting strong ESG performance.
Negative Points
- The system loss increased to 6.04%, driven by a higher share of high-loss residential customers, although it remains below the regulatory cap.
- Costs and expenses rose by 4% to PHP319 billion, with purchased power costs accounting for 82% of total expenses.
- The company's unregulated business contribution remained flat compared to the previous year, indicating limited growth in this segment.
- PacificLight's contribution decreased due to lower energy delivery and planned outages, impacting overall power generation results.
- The telco tower business is expected to take about four years to deliver positive numbers, indicating a long-term horizon for profitability.
Q & A Highlights
Q: Please share the actual number for the distribution's CCNI and generation's CCNI for nine months '24.
A: The distribution's CCNI is 59% of the total, which amounts to approximately PHP21 billion, while power generation's CCNI is PHP8.4 billion. - Betty Siy-Yap, Chief Financial Officer
Q: What is the latest update regarding the rate increase?
A: The ERC has decided that Meralco will continue to charge the reduced rate of PHP1.3522 per kilowatt hour until June 30, 2026, and Meralco is directed to file a 6RP instead of the 5RP. We are awaiting the official copy of the decision. - Jose Ronald Valles, Head of Regulatory Affairs
Q: What is the outlook for PacificLight's blended margin trends in full year '25?
A: With fuel rates going down, prices in the Singapore merchant market will follow. We plan to balance any decline by increasing capacities offered to the co-optimized market, particularly in the Visayas region. - Ronnie Aperocho, Chief Operating Officer
Q: What are the prospects of the telco tower business?
A: With the integration with PhilTower, the outlook is better as coverage is now more nationwide. We expect the tenancy ratio to improve, although it may take about four years to deliver positive numbers from a P&L standpoint. - Betty Siy-Yap, Chief Financial Officer
Q: What is the energy sales guidance for the fourth quarter '24 and the full year?
A: We project a modest 3% growth for the fourth quarter, leading to a 6% growth for the year, ending at around 53,350-plus gigawatt hours, which is about 3,000 gigawatt hours better than 2023. - Ronnie Aperocho, Chief Operating Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
