Lower prices of coal and nickel and fewer construction projects and real estate revenue undercut sales of diversified engineering conglomerate DMCI Holdings Inc., pushed lower its net income in the first quarter by double digits.
DMCI said first-quarter net income dropped 25 percent year-on-year to P5.6 billion, albeit still 19 percent higher than only P4.7 billion posted in the fourth quarter and the P2.9 billion reported in first quarter of 2019.
Group revenue fell by 17 percent to P27.4 billion as sales take a hit from lower electricity, nickel and coal prices and lower construction accomplishments, few real estate accounts that qualified for revenue recognition, and higher real estate sales cancellations.
The growing market preference for cleaner sources of energy has weighed heavily on the prices of coal.
“Market prices pose a significant challenge for us this year. We do not expect coal, nickel and electricity prices to recover to the highs of the past two years due to shifts in demand-supply dynamics,” said DMCI Holdings chairman and president Isidro Consunji.
“To mitigate these external challenges, we will focus on improving operational efficiency and refining our marketing strategies to enhance the value of our products and services,” he added.
Semirara Mining and Power Corp., the coal mining and power generation unit of DMCI, saw a 27 percent fall in net income contribution to P3.7 billion as weaker market prices muted the impact of higher coal shipments and electricity dispatch.
DMCI Homes contributed P879 million, a 12-percent drop due primarily to revenue recognition slowdown from ongoing and new accounts.
Contribution from affiliate Maynilad Water Services Inc. increased by 28 percent to P664 million owing to higher billed volume, better customer mix and improved average effective tariff.
DMCI Power nearly doubled its contribution to P264 million, driven by increased generation capacity and electricity demand, coupled with lower fuel expenses.
D.M. Consunji, Inc. contributed P98 million, a 64-percent decline on account of project delays and fewer ongoing projects.
DMCI Mining experienced a sharp reversal, sinking to a P22 million net loss due to decreased shipments, lower nickel grades and weaker selling prices.
