Construction and engineering group Megawide Construction Corp. saw a 6-percent drop in first-semester net profit to P927 million due to slower construction revenues at the beginning of this year.
For the second quarter alone, net profit slipped by 1 percent year-on-year to P487 million albeit contract revenues rebounded by 11 percent year-on-year to P4.11 billion.
Coming from a high base last year where construction spending surged ahead of the elections, six-month contract revenues in the first semester of this year fell by 10 percent year-on-year to P8.3 billion.
Including earnings attributable to minority interest, Megawide chalked up P1.15 billion in net profit for the first semester, down 2 percent year-on-year. Comprehensive net income in the second quarter was flat at P602 million.
In a press statement on Thursday, Megawide president Edgar Saavedra, said the second quarter numbers were in line with 2017 full year guidance.
“On a consolidated basis that includes the earnings contribution from Megawide’s airport operations business, the company should breach the P2-billion mark for full year net income. This is definitely a milestone as we celebrate the company’s 20th anniversary,” Saavedra said.
The company is targeting to generate P1.16 billion in net income from the construction business for the full year, 14 percent higher than the level last year.
Order book backlog stood at P33.7 billion as of end-June, indicating revenues which may be recognized in the next two years. New contracts include the Edades Suites of Rockwell Land Corp., BGC 5th Avenue Apartments of Fort Bonifacio Development Corp. and the Delta Project and Next Gen Zen 3 Zenith Foods Plant expansion under Zenith Foods Corp.
The company also underscored the positive impact of its decision to diversify from its core construction business, with the airport operations business posting a double-digit increase in passenger throughput and air traffic volume. As a result, first semester earnings contribution from airport operations jumped by 15 percent year-on-year to P550.92 million. Airport operations business now accounts to 48 percent of total business.
Megawide took over operations of the Mactan-Cebu International Airport in November 2014 through GMR Megawide Cebu Airport Corp., a joint venture with GMR group of India.
“Airport passenger traffic increased by 14 percent for the first six months of the year compared to the same period last year. This is led by an increase in domestic passenger traffic by 6 percent while international passenger traffic grew by 36 percent. Air traffic volume already increased by 17 percent for domestic flights and 37 percent for international flights while awaiting for completion and operation of the expansion project,” Saavedra said.
The construction of the new passenger terminal 2 in Mactan in now full swing and expected to be completed on schedule in June next year. This will bring the capacity of this airport to a total of 12.5 million passengers per annum. In 2017, the company was able to bring in 22 major international and domestic airlines serving 33 domestic and 16 international destinations.
Megawide is also scheduled to deliver in 2018 the Southwest Integrated Transport System (SWITS) Terminal, the country’s first intermodal hub. The SWITS facility is located in Paranaque City.
These infrastructure projects – whose concession contracts were both won through a bidding under the public-private partnership framework – are expected to boost Megawide’s recurring income over the medium to long-term period.
The company also seeks to participate in the government’s “Build, Build, Build” infrastructure program.
“We take pride in our unique position given our vast EPC (engineering, procurement and construction) expertise bolstered by Megawide’s distinct experience in being the O&M (operation and maintenance) for an international airport”, Saavedra said.
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.