Manila Water core net income fell 12 percent in the first quarter of the year with lower contribution coming from its domestic subsidiaries. On the other hand, operations in its East Zone concession remained resilient as performance improved on the back of continued supply and network management initiatives to ensure service availability. Considering one-offs driven by the raw water supply shortage in 2019, consolidated net income for the period increased 4 percent to ₱1.3 billion. 

Manila Water’s East Zone concession earnings stood at ₱1.63 billion for the first quarter of the year. Excluding one-offs recognized in 2019, core net income stood at ₱1.65 billion, lower by 7 percent from last year.

It can be recalled that the East Zone managed through a raw water supply shortage last year which caused a significant drop in water service availability. The situation pushed Manila Water to work through the challenges and further improve its network management capability. These efforts led to a more dynamic and efficient distribution network that enabled the Company to maintain water availability at near 100% for its customers, with potable water 24/7 and water pressure kept steady at regulatory levels. Entering 2020, the good coordination among the National Water Resources Board (NWRB), MWSS and the National Irrigation Administration (NIA) resulted in better water levels in the raw water dams. These favorable raw water levels and the Company’s consistent service performance yielded a 2 percent improvement in billed volume and a 10 percent increase in revenue for the period. Excluding the effect of the voluntary bill waiver program implemented in 2019, revenues increased by 2 percent.

Costs and expenses decreased 30 percent to ₱1.3 billion despite the 15 percent increase in direct cost, driven largely by the recorded ₱534 million penalty imposed by MWSS in relation to the water supply shortage last year. For direct costs, the increase was driven by higher chemical costs with the operations of the Cardona Treatment Plant in Laguna Lake, as well as higher power costs with the energization of new deep wells.

Domestic operations under Manila Water Philippine Ventures (MWPV) posted a net loss of ₱151 million in the first quarter. This was mainly due to the lower net income contribution from Estate Water with the decrease in supervision fees. The decline was primarily the result of the change in accounting treatment for said fees, but also in part by the stoppage of projects due to the Enhanced Community Quarantine. Even as the improved performance of other core subsidiaries like Laguna Water and Clark Water partially offset the decline, additional expenses recognized for MWPV’s various exposures during the period contributed to the net loss. Excluding one-offs, MWPV net income stood at ₱38 million for the period, 78 percent down from 2019.

For Manila Water Asia Pacific (MWAP), which houses Manila Water’s international business operations, performance in the first quarter of 2020 resulted to a net loss of ₱193 million. This was mainly driven by the recognition of additional expenses in relation to MWAP’s investment in Cu Chi in Vietnam, consistent with the Group’s governance and management practices. The recognition of additional expenses in relation to Cu Chi was partially offset by the increase in equity share in net income of associates, which stood at ₱219 million, 6 percent higher than last year. The Vietnam investments drove the increase in equity share in net income for the period, as a result of the implementation of tariff increases and higher billed volume in the Thu Duc Water and Kenh Dong Water operations.  

In view of the COVID-19 pandemic impact on the communities which Manila Water serves, numerous contingency measures have been put in place to ensure business continuity and to safeguard the health and safety of employees and customers.

With the onset of the Enhanced Community Quarantine, Manila Water implemented business contingency measures to ensure critical facilities and business centers remain operational to provide reliable service to our customers. Furthermore, in view of health and safety concerns, Manila Water suspended meter reading activities in its service areas for the duration of the Enhanced Community Quarantine. Finally, to assist customers amid the quarantine period, the company deferred the due date of customer bills for 30 days.

For Manila Water’s employees, in order to ensure welfare and safety amid the COVID-19 pandemic and Enhanced Community Quarantine, only essential technical and business operations employees are deployed at the facilities while the rest are on an on-call/work-from-home capacity. Deployed employees are provided the necessary protection (protective gear; disinfection of facilities) and support to ensure their safety. Equally important, preparations are underway for the safe and effective re-integration of employees upon the lifting of the Enhanced Community Quarantine.

Rene Almendras, Manila Water President and CEO sees the importance of cooperation among Manila Water’s employees, customers and partners amid the impact of COVID-19. “As we face the unprecedented challenges posed by the COVID-19 pandemic, we should work even more closely with our partners and stakeholders so we can continue to provide reliable service. Only by working together can we find safer, more effective and innovative ways of serving our customers under this new normal.”