Manila Electric Co. · PSE:MER

Manila Electric — FY2018 Earnings Presentation

56 slides from Manila Electric's earnings presentation, Feb 26, 2019

  1. Slide 1: Financial and Operating Results

    FINANCIAL AND OPERATING RESULTS minvestors and aan Soe =e CRESTS? bb ee a Ye tbls i

  2. Slide 2: Financial Highlights FY 2018

  3. Slide 3: Electricity Revenues

    304,454 304,454 282,556 282,556 Distribution revenues 62,016 Q4 77,043 Electricity Revenues = 295,389 59,600 68,167 Electricity Revenues = 275,172 Q3 76,867 73,357 Generation & other pass- through charges 233,373 215,572 Q2 79,737 74,456 Q1 70,807 66,576 Non-electricity revenues 9,065 7,384 FY 2018

  4. Slide 4: Costs and Expenses and Capital Expenditures

    7,827 10,198 25,885 3% 4% Costs and Expenses 9% 232,102 84% Purchased Power Operating Expenses Depreciation & Amortization Other Expenses 13,669 12,127 Capital Expenditures Subtransmission & Others Distribution 17% Facilities 83% FY 2018 FY 2017

  5. Slide 5: Core EBITDA and Core Income

    12.3% 12.3% 12.2% 12.2%  Margins  7.4% 7.2% 7.6% 7.2% 37,351 37,165 34,638 34,474 Q4 10,786 10,600 8,370 8,206 22,408 23,017 Q3 8,980 9,053 8,980 9,053 20,213 20,384 4,805 Q4 5,722 4,843 4,456 6,239 Q2 8,897 8,897 Q3 5,835 5,427 9,293 9,293 5,252 Q2 5,934 6,661 5,684 5,520 Q1 8,688 7,922 8,688 7,9

  6. Slide 6: Total Debt and Repayment Schedule

    TOTAL DEBT (in Million PhP) 40,016 40,256 (in Million PhP, Except Ratios) FY 2018 FY 2017 24,745 24,786 Cash & Cash Equivalents 36,471 45,937 15,271 15,470 Gross Debt 40,016 40,256 Net Debt 3,545 (5,681) FY 2018 FY 2017 Current Portion Non-current Portion Gross Debt/EBITDA 1.08 1.17 LONG-TERM DEBT R

  7. Slide 7: Core Earnings and Cash Dividends Per Share

    Core Earnings and Cash Dividends Per Share (in PhP) 22.78 (131%) 19.88 8.87 17.93 16.76 100% 17.37 16.99 95% 16.08 15.91 80% 15.10 14.43 14.47 90% 4.44 13.21 5.96 12.08 80% 8.38 10.78 6.43 5.22 13.908 80% 10.10 70% 3.59 12.554 70% 9.25 70% 4.53 2.89 2.64 4.63 6.45 60% 3.22 4.08 4.48 3.66 1.13 3.21 3

  8. Slide 8: Dividend Yield

    Dividend Yield 400.00 45.00 380.00 40.00 350.00 320.00 328.60 35.00 300.00 260.60 256.00 265.00 247.20 251.00 30.00 250.00 228.00 25.08 25.00 in PhP in PhP 200.00 18.23 20.00 150.00 13.38 15.00 16.21 15.25 100.00 13.79 13.38 12.36 10.00 10.20 50.00 7.80 8.10 6.95 5.00 - - 2010 2011 2012 2013 2014 20

  9. Slide 9: Operations Report

    OPERATIONS REPORT Performance ended December 2018

  10. Slide 10: Economic Setting

    “ECONOMIC SETTING” GDP FX RATE INFLATION (growth rates, at constant prices) (USD:PHP, annual average) 2012=100 7.6% 52.66 5.20 7.1% 50.40 6.9% 6.7% 6.7% 47.64 47.49 4.72 45.50 45.11 6.2% 44.40 6.1% 6.1% 43.31 42.45 42.23 4.21 3.78 3.60 3.10 2.90 3.7% 2.60 1.30 1.1% 0.70 2009 '10 '11 12 '13 14 '15 '1

  11. Slide 11: Economic Setting: PDST Interest Rates

    - 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 30-Jan-09 30-Mar-09 30-May-09 30-Jul-09 30-Sep-09 30-Nov-09 31-Jan-10 31-Mar-10 31-May-10 31-Jul-10 30-Sep-10 30-Nov-10 31-Jan-11 31-Mar-11 31-May-11 31-Jul-11 30-Sep-11 30-Nov-11 1-year 31-Jan-12 31-Mar-12 PDST-F 31-May-12 “ECONOMIC SETTING” 31-Jul-12

  12. Slide 12: Industry Setting: Fuel Prices

    “INDUSTRY SETTING: FUEL PRICES” MALAMPAYA NAT GAS PRICE GLOBAL COAL NEWC INDEX DIESEL PUMP PRICES (USD/ GJ) USD/MT PhP/L 45.43 12.69 45.28 43.65 121.38 42.94 42.42 11.52 11.20 10.79 107.34 35.85 99.24 96.96 9.66 33.39 31.85 88.46 8.57 85.26 29.52 8.05 7.84 27.06 72.21 70.82 6.88 66.11 6.04 59.20 200

  13. Slide 13: Financial Highlights (selected)

    Financial Highlights (selected) CCNI EBITDA Cash & Distribution Cash Equivalents Revenues 10.9%* 7.8%* 20.6%* 4.1%* P 22,408 Mn P 37,165 Mn P 36,471 Mn** P 62,016 Mn Share Price Market Capitalization 15.6%* 15.6%* P 380.00 P 428,298 Mn *vs. same period, previous year **Excluding AFS & HTM

  14. Slide 14: CCNI and EBITDA

    CCNI EBITDA ▪ Up 10.9% vs. 2017 (+PhP 2,195 Mn) ▪ Up 7.8% vs. 2017 (+PhP 2,691 Mn) (in PhP Mn) (in PhP Mn) CAGR : 5.4% CAGR: 3.1% 37,165 22,408 20,213 7.8% 18,887 19,583 18,128 34,474 10.9% 34,049 32,927 31,124 31,124 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 CONSOLIDATED CONSOLIDATED

  15. Slide 15: Cash & Cash Equivalents; Distribution Revenues

    CASH & CASH EQUIVALENTS* DISTRIBUTION REVENUES ▪ Decreased 20.6% vs. 2017 (-PhP 9,466 Mn) ▪ Up 4.1% vs. 2017 (+PhP 2,416 Mn) (in PhP Mn) (in PhP Mn) 69,469 CAGR : -14.9% CAGR : 2.4% 62,016 50,840 46,656 59,600 45,937 4.1% 36,471 56,870 56,373 20.6% 55,063 55,063 2014 2015 2016 2017 2014 2015 2016

  16. Slide 16: Share Price and Market Capitalization

    SHARE PRICE MARKET CAPITALIZATION ▪ Up 15.6% vs. 2017 (+PhP 51.40) ▪ Up 4.1% vs. 2017 (+PhP 57,933 Mn) (in PhP) (in PhP Mn) CAGR: 10.4% CAGR: 10.4% 380.00 * 428,298 * 328.60 360,672 370,365 320.00 15.6% 15.6% 265.00 288,537 298,681 256.00 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 *Dec. 28,

  17. Slide 17: Operating Highlights

    Operating Highlights Energy Customer Peak Net System Sales Count Demand Input (NSI) 5.3%* 4.6%* 6.1%* 4.7%* 44,313 GWh 6.61 Mn 7,399 MW 46,733 GWh Ave. Retail S-Factor Rates & GSL** 11.4%* Sustained Service Business P8.95/kWh Improvement Updates *vs. same period, previous year ** compared with

  18. Slide 18: Details

    Details

  19. Slide 19: Energy Sales

    ENERGY SALES: ▪ Up 5.3% vs. 2017 (+2,211 GWh) Share /  for FY2018 CAGR:5.9% RESIDENTIAL 3.8% 30.6% 5.2% 44,313 13,555 GWh 42,102 • Increase in organic and COMMERCIAL 40,142 5.3% Sales volume for new/ ramp-up sales 39.4% 4.9% Flat Streetlights 17,463 GWh 37,124 account for • Real Estate 8.1% INDU

  20. Slide 20: Residential sales growth drivers

    Residential sales growth largely due to newly energized accounts (7.0% growth) and ramp-up (3.7% growth) amidst a challenging environment (High inflation, low consumer confidence & weather disturbances) 2018 13,550 68 ORGANIC NORTH: ▼ 23.0 GWh or▼ 0.6% CENTRAL: ▲ 29.7 GWh or▲ 0.7% Average Temp: 27.9

  21. Slide 21: C&I growth drivers

    C&I growth drivers stood firm throughout the year. The trend on C&I top accounts remained relatively consistent COMMERCIAL INDUSTRIAL REAL ESTATE 15.4% SEMICON 6.9% ▪ Office Space Demand: Most of the major business districts (Makati & Ortigas BCD) are ▪ Electronics export remains the country’s top e

  22. Slide 22: Average Temperature

    AVE. TEMPERATURE(°C): ▪ Lower temperature mostly in 2018 vs. 2017 2018 Ave: 27.9C 2017 Ave: 28.2C 30.3 30.5 2016 Ave: 28.5C 30.1 29.5 29.7 29.3 28.9 28.8 29.9 28.7 28.6 28.3 28.5 28.1 28.4 28.4 27.8 28.8 27.9 27.7 27.6 28.2 28.4 27.2 27.1 28.2 27.0 26.6 27.6 27.6 27.9 28.0 26.2 26.2 26.7 26.8 201

  23. Slide 23: Customer Count

    CUSTOMER COUNT: ▪ Up 4.6% vs. 2017 (+288,123 new customers) Share /  for FY2018 RESIDENTIAL CAGR: 4.4% 4.7% 92.0% 2.8% 6.615 6,085,835 6.327 customers COMMERCIAL Count of Flat 6.038 4.6% Streetlight 7.8% account for 0.1%, 4.8% 4,815 customers INDUSTRIAL 513,658 5.784 customers 4.4% 0.2% 5.575 10

  24. Slide 24: Meralco Peak Demand and Net System Input

    MERALCO PEAK DEMAND: NET SYSTEM INPUT: ▪ Robust demand in 2018 ▪ Increased input in 2018 CAGR: 4.9% CAGR: 5.6% 46,733 44,639 7,399 42,866 May 23 39,694 4.7% 6,973 37,578 6,748 6.1% 6,298 6,121 MW GWh 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

  25. Slide 25: Clark Electric (CEDC)

    CLARK ELECTRIC (CEDC): ENERGY SALES, in GWh CUSTOMER COUNT 574.3 8.2% 527.0 (with PSPC) 2,283 10.0% (net of PSPC) 2,146 6.4% (net of PSPC) 479.1 2,145 (net of PSPC) (with PSPC) 2017 2018 CEDC’s top 5 sales contributors for December 2018 include Advent Energy (Yokohama Tire Phils.), SN Aboitiz Pow

  26. Slide 26: Energy Sources

    ENERGY SOURCES: ▪ 2018 Up 4.7% • Contracted supply contracts (PSAs and IPPs) delivered 58.5% of total volume in 2018 (4.6% less vs. 2017) • Contestable volume increased to 27.7% (+3.6% more vs. 2017) 100% 100% 46,733.5 GWh* 44,638.9 GWh* 4.7% 24.1% 27.7% 10,743.5 RES 12,946.9 1.4% 632.3 Special Con

  27. Slide 27: Power Fuel Mix

    POWER FUEL MIX: Details ▪ 2018 Up 4.7% • Natural Gas provided 39.1% of fuel sources while Coal 29.9% with balance, multi-fuel • Reduced coal supply by 4.2% (-1,243.8 GWh) 4.7% 100.0%GWh 46,733.5 44,638.9 100.0%GWh MULTI-FUEL** 11,984.5 26.8% 14,427.9 30.9% 15,212.9 34.1% COAL 29.9% 13,969.1 723.5 1

  28. Slide 28: Average Retail Rates

    AVERAGE RETAIL RATES: (Reflects Generator Wheeling adjustments) ▪ Generation Charge, largest component in customer’s bill, 57.2%; Meralco 15.7%; NGCP 8.6% FY2018 FY2017 BILL COMPONENT Overall Ave, P/kWh Overall Ave, P/kWh Generation Charge* 5.12 4.41 Transmission Generation** Distribution Charge** -

  29. Slide 29: Average Retail Rates

    AVERAGE RETAIL RATES: ▪ 2018 ARR up 11.4% (+92 ¢/kWh) vs. 2017 • Generation Charge, largest component in customer’s bill, 57.2%; Meralco 15.7%; NGCP 8.6% 11.4% 100% P8.95/ kWh 100% 8.03/ kWh 12.0% 1.08 12.8% (+P0.12/kWh) TAXES, UNIV CHARGE 11.9% 0.95 FIT-ALL 2.5% 0.23 42.4% (+P0.07/kWh) 2.0% 0.16

  30. Slide 30: Average Retail Rates: FY2010-FY2018

    AVERAGE RETAIL RATES: FY2010-FY2018 ▪ 2018 rate increase result of increase in Generation, Taxes and FIT-All Charges • Since 2012, among the more significant increases have been FIT-ALL, Universal Charges, and Taxes 9.64 9.44 9.42 9.14 8.94 8.95 8.70* 8.26 8.03 7.50 11.4% 2010 2011 2012 2013 2014 2

  31. Slide 31: Containing the Generation Charge: FY2010-FY2018

    CONTAINING THE GENERATION CHARGE: FY2010-FY2018 Average Annual Generation Charges; for Non-TOU customers 5.75 5.38 5.39 5.47 5.23 5.11 5.04* 4.60 4.45 3.94 14.8% 2010 2011 2012 2013 2014 2015 2016 2017 2018 *Average in P/kWh PARENT

  32. Slide 32: Further Improving System Loss

    FURTHER IMPROVING SYSTEM LOSS: NEW RECORD ▪ 2018 performance at ALL-TIME BEST of 5.67% • Improved by 4.1% vs. 2017’s 5.91%; lower by 1.83%pts. vs. current System Loss cap of 7.50%* • Customer savings of P6.1Bn or 14¢/kWh in 2018 • Clark Electric Distribution Corp. (CEDC)’s 12MMA system loss ending D

  33. Slide 33: Operating Performance

    OPERATING PERFORMANCE: ▪ All performance indicators IMPROVED and well within REWARDS* range in 2018 System Loss, (%) -12MMA SAIFI, Forced & PAI (Times) SAIDI, PAI (Minutes) CAIDI, Forced & PAI (Minutes) 8.61 7.28 144.6 144.61 109.18 103.39 97.79 94.09 92.87 2.66 59.65 58.47 54.68 53.68 58.26 6.49 6.

  34. Slide 34: Customer Satisfaction Index (CSI)

    CUSTOMER SATISFACTION INDEX (CSI): ▪ 2018 CSI at 8.25, declined by 1 significant point versus 2017’s 8.39 Explainers: Overall (-) Effect of higher rates due to the impact of higher inflation, interest rates, fuel prices, forex, and taxes. HMB (-) Billing & Payment Concerns/Queries (-) 2H Power Quali

  35. Slide 35: Business Updates & Other Events of Interest

    Details Business Updates & Other Events of Interest

  36. Slide 36: Updates on the New Clark City (NCC)

    _ Updates on the.New Clark City (NCC) Electric Power Distribution SPIES SV A

  37. Slide 37: New Clark City Project - Notice of Award

    Business Updates: New Clark City (NCC) Project - Issuance of the Notice of Award  On 18 January 2019, the BCDA-Joint Venture Selection Committee (JVSC) issued the Notice of Award (NOA) to the Meralco Marubeni Consortium as the winning Private Sector Participant (PSP) for the Joint Venture Developme

  38. Slide 38: Business Updates: New Clark City (NCC)

    Business Updates: New Clark City (NCC) ATHLETIC STADIUM GOVERNMENT HOUSING GOVERNMENT BUILDING AQUATIC CENTER SUBSTATION SITE 1 ALIGNMENT BCDAMEETING NCC SITE OFFICE PRE-BID CONFERENCE FIELD INSPECTION STADUIM & GOVT HOUSING BCDA NCC SITE OFFICE • Jan 17 -- Alignment of NCC construction schedule wit

  39. Slide 39: Business Updates: Isla Verde Electrification

    Business Updates: Isla Verde Electrification  Feb. 15, 2019: Meralco inaugurated its first 32-kW SOLAR PANEL MICROGRID in partnership with the Batangas City LGU and the United States Agency for International Development (USAID) ▪ Provides electricity to around 40 households in one of the six barang

  40. Slide 40: Business Updates: Completed Projects

    Business Updates: Completed Projects ▪ Increased power transformer capacity by 385 MVA and circuit length by 136.7 km Total Cost: PhP 1.949B 5 Sub-transmission Line 5 Substation Projects 6 Other Significant Projects 55 Residual Projects Projects (Php 303M) (Php 1,057M) (Php 341M) (Php 248M) 1.Expans

  41. Slide 41: DPWH and BBB Relocation Projects

    Business Updates: DPWH and BBB Relocation Projects Count of Poles BBB YEAR Relocated DPWH MNTC Segment 10 BBB DPWH MRT 7 Bulacan Provincial 8.18 km 22.8 km 2016 674 541 Capitol, Malolos 253 Affected Poles/40WO 439 Affected Poles/69wo 2017 441 1,080 94% Comp /Target:2019 42% Comp /Target:2019 2018 95

  42. Slide 42: DOE's Sitio Electrification Program

    Business Updates: DOE’s Sitio Electrification Program No. of Sitio No. of Project Cost 45 46 No. MOA No. Area / Province Projects Household (in millions of Php) Bulacan 1 2017EF-005 3 121 7.344 (Norzagaray) of 2 2017EF-003 Bulacan 3 376 4.848 3 2017EF-001 Batangas 7 456 12.463 Completed Projects 4 2

  43. Slide 43: Business Updates: Meralco Online

    Business Updates: Meralco Online ▪ 2018 was a pivotal year in Meralco’s digital journey with the launch of Meralco Online… ….and 2019 looks to take off from the strong start Operational SEP 2018 to FEB 2019 Operational Metrics MERALCO ONLINE PAYMENTS (AMOUNT) MOBILE ONLINE (APP DOWNLOADS) PAYMENTS M

  44. Slide 44: Prepaid Electricity Service (PRES)

    Business Updates: Prepaid Electricity Service (PRES) ▪More than 100,000 customers are activated under PRES; Customer Satisfaction is at all-time high MERALCO breached PRES Customer Satisfaction Index* is at an all-time high at 8.76 – 9 significant points higher than 2017 the 100k mark in Main driver

  45. Slide 45: Business Updates: Significant Events

    Business Updates: Significant Events ▪For our Corporate customers, we continuously aim to fulfill our promise to be their end-to-end energy solutions partner We continue to offer Power Ideas and a whole slew of solutions: energy consultation and diagnostics for customized energy solutions for load-s

  46. Slide 46: Business Updates: Significant Events

    Business Updates: Significant Events ▪…and the resulting partnership stories were communicated across several touchpoints, with special focus on our Luminaries. We utilize broadsheets, e-DMs, the website, Meralco LinkedIn & Power Club magazine. Verbatim event feedback from CBG customers: a. Profrien

  47. Slide 47: eSakay eJeep launch

    Business Updates: Significant Events eSakay Makati-Mandaluyong eJeep launch January 18, 2019 In partnership with DOTr, and Makati and Mandaluyong LGUs, eSakay will operate 15 eJeeps along the Buendia MRT Station- Mandaluyong City Hall (via Jupiter St.) route. Chairman MVP said the launch of the proj

  48. Slide 48: Anvil Awards

    Business Updates: Significant Events Meralco & One Meralco Foundation (OMF) received top awards at 54th Anvil Awards, recognized for strong commitment to customer, community, country January 30, 2019, Grand Ballroom, Marriott Hotel Gold Anvil Award: • Meralco: Powering Up Customer-Centric Service Co

  49. Slide 49: Meralco's Brand of 'Malasakit' & 'Makabayan'

    Business Updates: Meralco’s Brand of ‘Malasakit’ & ‘Makabayan’ 48,249 6,591 18 426,445 2,279 FAMILIES LOW-INCOME PUBLIC SCHOOLS STUDENTS PARTICIPANTS HOUSEHOLDS DIRECTLY BENEFITED ENERGIZED IN THE ENERGIZED; FROM 420 SCHOOLS IN YOUTH DEVELOPMENT FROM VARIOUS MERALCO BENEFITTING A TOTAL NATIONWIDE UT

  50. Slide 50: Meralco's Brand of 'Malasakit' & 'Makabayan'

    Business Updates: Meralco’s Brand of ‘Malasakit’ & ‘Makabayan’ 10,000 10,596 167 20,674 HOUSEHOLDS FAMILIES COMMUNITY VOLUNTEER HOURS RELATIONS PROJECTS BENEFITED FROM BENEFITED FROM WITHIN THE MERALCO RENDERED BY 2,125 POWER RESTORATION DISASTER RELIEF FRANCHISE AREA (147); EMPLOYEE VOLUNTEERS; (TY

  51. Slide 51: Project Updates

    The information as contained herein may neither be reproduced nor used, in whole or in part, for any other purpose nor furnished to any person(s) without express written permission from MERALCO PowerGen Corporation PROJECT UPDATES 26 February 2019

  52. Slide 52: San Buenaventura Power Limited Co. (SBPL)

    San Buenaventura Power Limited Co. (SBPL) 455MW (net) Supercritical Coal-Fired Power Plant in Mauban, Quezon ▪ BOI registered pioneer supercritical pulverized coal power plant ▪ 38th month of construction; COD: Q3 2019 ▪ 97.38% EPC Overall Work Progress as of December 2018 Aeration Pond, Electrical

  53. Slide 53: Atimonan One Energy, Inc. (A1E)

    Atimonan One Energy, Inc. (A1E) 2x600 MW (Net) Ultra Supercritical Coal-Fired Power Plant in Atimonan, Quezon ▪ Pending Power Supply Agreement (PSA) approval by the ERC ▪ Committed Project with DOE, with Certificate of Energy Project of National Significance granted ▪ Registered as Preferred Pioneer

  54. Slide 54: Atimonan One Energy, Inc. (A1E)

    Atimonan One Energy, Inc. (A1E) 2x600 MW (Net) Ultra Supercritical Coal-Fired Power Plant in Atimonan, Quezon ▪ A1E received a recognition from the Public Relations Society of the Philippines during the 54th Anvil Awards held last January 30. ▪ The Company won a Silver Anvil for its community newsle

  55. Slide 55: Renewable Investments

    Renewable Investments Solar ▪ MGen is focused on development of a portfolio of utility scale solar generation projects to supply the Luzon grid, and the customers of Meralco, with competitive tariff. ▪ MGen believes solar generation will form an important part of the energy mix going forward, and wi

  56. Slide 56: Disclaimer

    This presentation is prepared for the participants of the MERALCO Investors and Analysts Briefing & Teleconference held on February 26, 2019. This presentation has consequential limitations and is not a comprehensive discussion about Manila Electric Company and Subsidiaries (MERALCO). The same mater

Manila Electric Company (Meralco) — FY2018 Earnings Presentation on 6ix