Manila Electric Company (MERALCO) Reported a PHP 37.1 Billion Consolidated Core Net Income in 2023, Up 37%

Manila Electric Company (Meralco) announced that its Consolidated Core Net Income for the year ended December 31, 2023, increased by 37% to P 37.1 billion from P 27.1 billion in 2022. This increase was primarily due to the company's power generation and retail electricity businesses, as well as the ongoing growth in energy sales from its distribution utility ("DU") business. 

​Consolidated Reported Net Income likewise improved by 34% to P 38.0 billion from P 28.4 billion. Meralco ended the year with Core Earnings Per Share (“EPS”) of P 32.925, higher by 37% over the previous year, and Reported EPS of P 33.735, up 34%. Consolidated revenues were at P 443.6 billion from P 426.5 billion due to the combined effect of the increase in energy sales of the DU and the downward impact of the DRTU refund in 2022.

Meralco’s average retail rate rose by 11% to P 10.55 per kWh from P 9.52 per kWh year-on-year largely due to the 11% increase in generation charge, which accounted for about 66% of the total retail rate during the year. On the other hand, Meralco’s average distribution charge accounted for 14% of the retail rate. Meralco’s approved tariff is at P 1.3522 per kWh.

Purchased power cost (“PPC”) increased by 2% to P 328.2 billion from P 322.6 billion, reflecting the (i) higher cost of replacement power for the capacity previously provided under the terminated Power Supply Agreements (“PSAs”) with South Premiere Power Corporation (“SPPC”) for 670 MW and with Sual Power, Inc. for 330 MW; (ii) increase in the fuel component and energy fee of the non-renewable power generation plants; and (iii) peso depreciation.

Partially mitigating the increase in PPC were the lower Malampaya gas price, which was at an average price of US$ 9.60 per GJ in 2023 from US$ 10.18 per GJ a year ago, and lower average Wholesale Electricity Spot Market (“WESM”) prices with improved supply conditions and lesser instances when the secondary price cap was imposed. There were only one (1) Yellow/Red Alert and two (2) Yellow Alerts in 2023 compared with two (2) Yellow/Red Alerts and 10 Yellow Alerts in 2022. The secondary price cap was triggered only 7.2% of the time in 2023 versus 25.6% in 2022.

By end-2023, Meralco had invested P 30.0 billion for capital expenditures (“CAPEX”), of which 67% or P 20.2 billion were utilized for Network CAPEX that covered new connections, asset renewals, and load growth projects, as well as pole relocation works to support various Government infrastructure projects. Significant amounts were also spent on (i) additional 334 telecom towers transferred to Miescor Infrastructure Development Corporation (“MIDC”) under a sale and leaseback arrangement and additional 36 build-to-suit telecom towers; (ii) the completion of Phase 1 and on-going construction of Phase 2 of the Baras solar plant by PH Renewables, Inc., a joint venture between Meralco PowerGen Corporation (“MGen”) and Mit-Renewables Philippine Corporation; and (iii) continued facilities build-out of Radius Telecoms, Inc. (“Radius").

Operating expenses (“OPEX”) were flat at P 37.5 billion with the lower amount of provision for bad debts, which offset the higher costs of (i) contracted services for repairs and maintenance of DU facilities; (ii) information systems and information technology-related expenses, including cloud storage upgrade; (iii) customer-related expenses for disconnection, reconnection and relocation, and collection services of the DU; and (4) salaries/contracted services and project-related materials costs of non-power subsidiaries.

Consolidated interest-bearing debt stood at P 99.4 billion, including those of subsidiaries which totaled P 53.9 billion. Maturities within one (1) year amounted to P 33.6 billion. In December 3 2023, holders of P 4.1 billion out of a total P 7.0 billion 12-year Note put their bonds on Meralco, with the balance to be settled upon maturity in December 2025.

The Meralco Board of Directors (“BOD”) approved the declaration of a final cash dividend amounting to P 11.235 a share to all shareholders of record as at March 27, 2024, payable on April 24, 2024. This brings the total dividend declared out of the 2023 CCNI to P 19.755 a share, equivalent to 60% of Core EPS. Using the December 31, 2023 closing price of MER of P 399.00, dividend yield stood at 5%. Total cash dividend paid and to be paid out of 2023 CCNI would total P 22.3 billion.