Manila Water Company: Manila Water 1st Half Pre-Tax Income Up 30%

Manila Water 1st Half Pre-Tax Income Up 30%

Posted: Monday July 9, 2007

Manila Water reported today strong operating and financial results in the 1st half of 2007 as year-to-date operating revenues posted a significant 18% increase over the same period last year to P3.5 billion.

The growth in sales was matched by continued effective management of operating expenses, boosting earnings before interest, taxes, depreciation and amortization (EBITDA) to P2.3 billion or a 27% growth from last year’s level. This healthy operating margin helped mitigate the impact of the expiration of the company’s income tax holiday in 2006. While pre-tax earnings grew by 30%, net income for the first semester declined 9% year-on-year to P1.1 billion after providing P485 million for income tax payments. The Company further noted that the bottom line for the second quarter at P609 million is P100 million better than the first quarter.

The increase in the Company’s revenues is largely attributed to the increase in its sales (billed volume) which reached 1,054 million liters per day as of end of June 2007. This reflects a 13% growth over last year’s level. This achievement was supported by its aggressive expansion programs which allowed it to add 61 thousand new household connections during the first six months, bringing total households served to 953 thousand as of June 2007. Water availability and coverage has likewise improved with eight cities within the East Zone now 100% covered by Manila Water.

Manila Water has likewise set a significant milestone in terms of system losses reduction. System losses, or non-revenue water (NRW), further dropped to 25% as of end of June 2007, a four percentage points cut from the previous year’s level. This was accomplished through the Company’s effective management of its water supply, coupled with massive pipe replacement projects.

“Our continuing growth is driven by our continuing capital investments. Over the past ten years we have invested more than P25 billion for projects focused on the expansion of our network and improvement of operating efficiencies. We are now realizing the results of these investments as shown by our operational milestones during the first semester, particularly our billed volume which has already breached the one billion liters per day mark as early as May this year,” said Manila Water President Antonino T. Aquino. “Moving forward, we expect to sustain this growth momentum as we embark on a more aggressive capital investment program of at least P30 billion in the next five years geared towards improving the reliability of the network as well as increased investments in wastewater and new water sources,” Aquino added. These investments are reflected in the company’s rate rebasing plan submitted to the regulators for approval within the year and for implementation by January 2008.

Manila Water is also looking at projects outside of its concession area. Earlier this year, the Company has announced that it has received notices of pre-qualification for its bids for Ho Chi Minh NRW Reduction Project and Hongkong Wastewater Design-Build-Operate (DBO) Contract.