Manila Water income down 8% after lower billed water volume


MANILA Water Co., Inc. recorded an 8% drop in its attributable net income to P1.30 billion for the first quarter due to lower contribution from its east zone water concession area, it said in a regulatory filing on Tuesday.

The Ayala-led company’s attributable income was at P1.42 billion in the same January-to-March period last year.

Manila Water’s consolidated operating revenues fell 12% to P4.85 billion from P5.51 billion as a result of lower billed volume from the commercial and industrial segments of its east zone concession area.

It added that revenues declined on lesser supervision fees from its subsidiary Manila Water Philippines Ventures, Inc. (MWPV) and lower billed volume from its domestic subsidiaries.

“The group derived 80% of its operating revenues from the sale of water, while 16% came from environmental and sewer charges. Other revenues, which accounted for the balance, are comprised of supervision fees, after-the-meter services, connection fees, and septic sludge disposal, among others,” Manila Water said.

Earnings before interest, income taxes, depreciation, and amortization (EBITDA) for the period fell 5% to P3.23 billion.

Meanwhile, the water provider said its consolidated costs and expenses — without depreciation and amortization — went down 4% to P1.89 billion on the back of lower direct costs.

Direct costs by fell 12% to P859 million due to lower power, light and water, water treatment chemicals, and repairs and maintenance costs resulting from lower billed volume.

Manila Water’s subsidiary MWPV trimmed its net loss to P56 million for the period from P151 million last year.

“This is largely due to the effect of the one-time recognition of discontinued operations of Zamboanga Water last year amounting to P193 million,” Manila Water said.

MWPV’s revenues dropped 15% to P999 million on the back of lower water and sewer revenues, and supervision fees. Its EBIDTA also fell 27% to P337 million.

“The lower water and wastewater revenues for the period were mostly on account of the 70% decline in revenues noted in Boracay Water. This decline is due to the prevailing travel restrictions and consequent business slowdown due to the COVID-19 pandemic,” Manila Water said.

Another subsidiary, Manila Water Asia Pacific Pte. Ltd. (MWAP), posted a net income of P123 million for the period, a reversal of its P193-million net loss a year ago.

“This was mainly due to the recognition of one-off expenses in March 2020 in relation to MWAP’s investment in Cu Chi Water,” Manila Water said.

The billed volume during the period rose 5% to 172.4 million cubic meters, against 164.4 million cubic meters in 2020.

On March 31, Manila Water signed a new concession agreement with the government.

Under the revised agreement, the water provider will no longer be allowed to charge its customers for corporate income tax and implement foreign currency differential adjustments.

“The revised concession agreement lowers the yearly inflation factor to two-thirds of the Consumer Price Index adjustment and sets a tariff cap on rate increases equivalent to 1.3x the previous standard rate for water and 1.5x the previous standard rate for wastewater,” Manila Water said.

Some of the other changes in the concession agreement include the implementation of a tariff freeze until Dec. 31, 2022, the change to a 12% fixed nominal discount rate for expenditures, and the exclusion of the non-interference clause in the “Undertaking Letter of the Republic,” which will apply to contracts and obligations existing at the time of execution of the revised agreement.

On Tuesday, shares of Manila Water at the stock exchange fell 4.02% or 60 centavos to close at P14.34 each. — Revin Mikhael D. Ochave

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