November 21, 2017 | MANILA, PHILIPPINES

Megawide net income dips in Q1

DIVERSIFIED engineering and infrastructure conglomerate Megawide Construction Corp. (Megawide) saw its earnings dip in the first quarter of the year as its construction business slowed, even as returns from its Mactan-Cebu International Airport (MCIA) continued to grow.

In its quarterly report filed with the Philippine Stock Exchange, Megawide reported that its consolidated net income reached P549.01 million in the January to March period, 4% lower than the P573 million it made in the same period last year.

Megawide said its consolidated revenues of P4.77 billion for the first quarter already represented a 26% accomplishment of its full-year 2017 target, although this was also 19% down from the P5.91 billion recorded the previous year.

The listed builder attributed the slight decline to the “cyclicality of the construction industry” during the period, although noting that construction is expected to ramp up in the second half of the year to enable the firm to meet its targets.

“It is a function of the order book and projects in varying stages of construction. This cyclicality is simply part of the industry -- Megawide is very much on track to meet its full-year target,” Megawide President Edgar B. Saavedra was quoted as saying in a statement filed with the PSE on Wednesday.

Sought for details, Megawide said its consolidated net income is expected to grow 13% or target of P2.16 billion in 2017 from 2016’s 30% growth.

“If you look at Q1 consolidated net income which was recorded at P549 million, this is a 25.4% achievement of the full year target; thus, even with the slight contraction of 4% on a quarter-on-quarter basis, we are still on track,” Megawide said.

The construction business contributed 88% to total consolidated earnings in the first quarter, while its MCIA operations accounted for 12% or P570 million.

Construction revenues fell 24% to P4.19 billion from P5.48 billion, the report showed.

The diversified conglomerate said its order book backlog stood at P37.14 billion at end March, inclusive of P2.87 billion worth of new contracts from the Edades Suites of Rockwell Land Corp., BGC 5th Avenue Apartments of Fort Bonifacio Development Corporation, and the Delta Project and Next Gen Zen 3 Zenith Foods Plant Expansion under Zenith Foods Corp.

Still, the firm’s direct costs -- mainly for construction, airport operation and airport merchandising operation -- declined 22% to P3.65 billion from P4.71 billion.

GMR-MEGAWIDE Cebu Airport Corp., meanwhile, contributed P271 million or 49% to the parent’s consolidated net income. This is 44% higher than during the same period in 2016, the listed builder said in its filing.

The “strong” airport revenue is driven by a 16% increase in passenger traffic compared to the same period in 2016. Megawide said international passenger volume increased by 42%, outpacing the 5% domestic passenger volume growth.

Mr. Saavedra attributed the increase in passenger traffic to new international flights and local routes mounted in 2016 and as a result of the company’s strategy to promoted MCIA as a main gateway for Visayas and Mindanao.

Construction of MCIA’s Terminal 2 is also currently in full swing and is expected to be operational by the end of June 2018, adding a capacity of 8 million passengers per annum to the current 4.5 million capacity of Terminal 1.

Megawide, in partnership with Bangalore-based airport operator GMR Infrastructure Ltd., won in April 2015 the contract for the P17.52-billion MCIA project under the Aquino government’s flagship public-private partnership program.

“Our outlook for 2017 remains positive, especially with the continued focus on infrastructure highlighted by the Duterte administration’s Build, Build, Build program,” Mr. Saavedra said.

Profits of the listed contractor surged by 30% last year to P1.92 billion from the P1.47 billion in 2015.

Shares in Megawide gained by 0.75% to end Wednesday’s trading at P18.90 each. -- I.C.C. Delavin