Manila Water hits record operating earnings in 2023

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Manila Water posted ₱20.5 billion in operating earnings for 2023. Solid topline growth for the year was driven by the continued recovery of customer demand with the resumption of economic activities, as well as implementation of tariff adjustments in the East Zone Concession and several Non-East Zone Philippines businesses. Coupled with Manila Water’s implementation of cost management and efficiency initiatives, operating margins improved 11 percentage points to 67%. 

On a consolidated level, revenues increased by 35% to nearly ₱31 billion. This growth was supported by the recovery of the East Zone’s commercial and industrial accounts, as well as by the 20% increase in revenues from Manila Water’s Non-East Zone Philippines businesses. Furthermore, the company’s efforts to streamline costs and realize operating efficiencies contributed to holding costs steady at ₱10.8 billion. On the other hand, Manila Water recognized a one-off provision related to East Water, one of the company’s legacy investments which was acquired back in 2018. Specifically, an impairment provision amounting to ₱4.1 billion was recognized to reflect current market conditions and outlook. This tapered consolidated net income to Php5.6 billion, with net income margin settling at 18%. Taking out non-recurring items, core net income grew by 74% to Php9.6 billion, with core net income margin improving to 31%.

At Manila Water’s East Zone Concession, net income improved by 60% to ₱8.8 billion as higher revenues and effective cost management drove the significant growth in earnings. Revenues grew by 41% to ₱24.1 billion with the implementation of the Rate Rebasing tariff adjustment early last year, as well as the increase in consumption across all customer segments. Meanwhile, cost increases in line with higher production volume and completion of new facilities were offset by non-recurring costs recognized in 2022. Favorable efficiencies in direct and overhead costs with the implementation of cost efficiency initiatives further helped keep costs steady at ₱7.2 billion.

In January last year, Manila Water implemented the first tranche of tariff adjustments in line with its approved Rate Rebasing Service Improvement Plan. In said plan, Manila Water committed to invest close to ₱100 billion over the next 5 years to continue its water supply and network improvement projects, as well as to expand coverage and capacity of its wastewater system.

Beyond the East Zone Concession, the company’s Non-East Zone Philippines group continued to strengthen its business trajectory to end the year at ₱750 million in earnings. This performance was supported by 6% billed volume growth, coupled with tariff adjustments and higher contributions from several of its key businesses to drive revenues to ₱5.8 billion. On the other hand, cost and expenses increased by 11% to ₱3.5 billion with higher direct and manpower costs. For Manila Water’s international operations, the positive performance of its Vietnam bulk water businesses and operations in the Kingdom of Saudi Arabia were offset by higher interest expenses and the impairment recognized for East Water. These developments led to a net loss of ₱3.9 billion for Manila Water International for 2023.

Lastly, the Manila Water pushed forward with its CAPEX projects under its various businesses to ensure prudent compliance to regulatory and service commitments, with group CAPEX reaching ₱21.6 billion for the year.

Jocot de Dios, Manila Water President and CEO, commented on the company’s 2023 performance: “We continue to be encouraged by the recovery of our business and efficiencies from of our cost management initiatives. In our East Zone business, the implementation of the first set of tariff adjustments has allowed us to continue our projects in compliance with our service obligations. Similarly, we see good results from our non-East Zone subsidiaries such as Boracay, South Luzon, and Calbayog which have posted turnarounds in operations. For our international businesses, the deliberate view we take on our legacy investments is evidence of our disciplined portfolio management. We will further streamline our investments and look for better growth opportunities. We are hopeful that our hard work will continue to yield positive results for the rest of the year.”

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