MANILA – Diversified engineering conglomerate DMCI Holdings Inc. recorded PHP10.5 billion in consolidated net income in 2019, a 27-percent drop from PHP14.5 billion the previous year.
The decline was mainly attributable to lower contributions from Semirara Mining and Power Corporation (SMPC) and a one-time goodwill impairment charge for a mining investment.
Excluding the non-recurring loss of PHP1.9 billion in 2019, mostly coming from the non-cash goodwill impairment, core net income decreased by 14 percent year-on-year from PHP14.5 billion to PHP12.4 billion.
For the fourth quarter alone, consolidated earnings plunged 70 percent year-on-year from PHP4.1 billion to PHP1.2 billion, primarily due to a 47-percent reduction in earnings contribution from SMPC and a non-cash goodwill impairment charge of PHP1.6 billion for the Acoje mine assets of Zambales Diversified Metals Corporation (ZDMC) and Zambales Chromite Mining Company (ZCMC).
“Market conditions and regulatory restrictions no longer support our original valuation of ZDMC and ZCMC so the Board decided to write-off the goodwill associated with these investments,” DMCI Holdings chairman and president Isidro Consunji said in a statement on Thursday.
DMCI Holdings bought the two companies in 2014 when mid-grade nickel prices averaged USD49. In 2019, the average selling price of mid-grade nickel plunged 45 percent to USD27, effectively reducing the saleable resource.
ZCMC was non-operational in 2019 as it lacked the requisite permits to commence operation. Meanwhile, ZDMC was unable to resume full commercial production due to the absence of ancillary permits in other areas.
Full year core net income contributions from SMPC fell 23 percent from PHP7.4 billion to PHP5.7 billion as power generation and average coal prices both decreased by 22 percent.
DMCI Homes experienced a marked slowdown in project construction, resulting in a 4-percent slide in earnings contribution from PHP3.2 billion to PHP3 billion.
Net income contributions from affiliate Maynilad Water Services Inc. went down by 4 percent to PHP1.8 billion owing to higher amortization and depreciation expenses for its capital expenditure program.
D.M. Consunji Inc. posted a 25-percent drop in net income share from PHP1.2 billion to PHP906 million due to the absence of significant realized claims and savings from projects nearing completion compared to last year.
Earnings contribution from DMCI Power Corporation grew by 31 percent from PHP465 million to PHP611 million, following the approval of a PHP1.13 per kwh adjustment on its non-fuel tariff for its Aborlan power plant in Palawan.
An 82-percent increase in nickel shipment pushed DMCI Mining core earnings to rise 56 percent from PHP117 million to PHP182 million.
Contributions from DMCI Holdings and other investments slipped 6 percent to PHP223 million due to lower interest income. (PR)
