Manila Water posts P4.9 Billion Net Income in Q3
Manila Water maintained positive net income growth from the previous year to reach P4.9 billion, driven by the steady performance of the Manila Concession and supported by Manila Water Asia Pacific (MWAP).
On a consolidated level, Manila Water posted billed volume growth of 4%, led by the Manila Concession and international subsidiaries under Manila Water Asia Pacific. Said growth significantly offset the relatively flatter billed volume trajectory in the local subsidiaries under Manila Water Philippine Ventures. Cost pressures have increased with the current economic environment as well as necessary operational and growth initiatives, with cost of services and operating expenses growing by 21 percent to P5.94 billion.
In the Manila Concession, robust billed volume growth was maintained at 3 percent, with billed connections totaling over 980,000. Systems losses (Non-revenue Water) improved to 12.3 percent from the same period last year, pointing to the continued thrust towards operating efficiency. Capital expenditures (CAPEX) tracked closely to historical performance, with over P6.0 billion for the first nine months of the year. All these lent to strong EBITDA and Net Income margins, measured at 72% and 40%, respectively.
Equally important, Manila Water secured approval from Metropolitan Water and Sewerage System (MWSS) for a positive tariff adjustment between P5.94 – P6.18 per cubic meter, or nearly 25% of the current basic tariff for the Fourth Rate Rebasing Period. The first tranche of the adjustment was successfully implemented on October 16, 2018, by way of a P1.46 increase per cubic meter. Subsequent adjustments are programmed for 2020 and 2021; each amounting to Php2.00. Moreover, MWSS incorporated a possible additional incremental adjustment in 2022, from Php0.76 to a Php1.04 increase. This is contingent to the development and execution of key water source projects. Manila Water Philippine Ventures (MWPV) posted 5 percent revenue growth to P2.38 billion, supported by a steady topline in its existing subsidiaries. However, cost levels have increased due to the takeover of new facilities and estates by its business-to-business arm, Estate Water, as well as the continued deployment of resources to support market expansion. Fortunately, recent new business wins provide potential earnings growth on the horizon. Particularly, MWPV recently received a Notice of Award from Tanauan Water District for the provision of water supply and sanitation services in Tanauan, Batangas. The project totals P1.51 billion over the 25-year contract period. Going to northern Luzon, MWPV was recently granted a franchise to provide water supply and sanitation services in San Fabian, Pangasinan. This will be for a term of 25 years with an assumed billed volume of over 12.6 million liters per day. Total capex of the project is estimated at P742 million and is expected to be operational by 2019.
Going beyond domestic shores and into ASEAN, MWAP continues to post strong performance, with an 82 percent increase in equity share in net income of associates to P514 million. The Vietnam operating subsidiaries, namely Thu Duc, Kenh Dong and Saigon Water, exhibited significant revenue and earnings growth. The new acquisitions in the region – East Water in Thailand, and PT Sarana Tirta Ungaran in Indonesia – continue its positive contribution, with P189 million and P0.70 million respectively.
Manila Water President and CEO Ferdinand M. Dela Cruz expressed his appreciation with the successful conclusion and positive resolution of the recent Rate Rebasing process. “With the Rate Rebasing exercise with MWSS finally reaching resolution, we can now focus on implementing our business plan for the coming years given increasing demand and highly encouraging developments in the Manila Concession. This renewed stability enables us to intensify our drive towards our growth aspirations beyond the East Zone, both domestically and in the region."
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