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Transport infrastructure developer reports 18% drop in profit

Boosted by the opening of Mactan-Cebu International Airport’s international terminal in July 2018, airport operations contributed 20% to total consolidated revenues in 2018. Photo from mactancebuairport.com

Diversified engineering and infrastructure construction company Megawide Construction Corp posted a net profit of P1.8 billion in 2018, 18% lower than the P2.2 billion earned in 2017, the decrease attributed to the cyclical nature of the construction business.

“2018 was a landmark year for Megawide as we opened two flagship infrastructure projects, the Mactan-Cebu International Airport (MCIA) Terminal 2 and the Parañaque Integrated Terminal Exchange (PITX),” Megawide chairman and chief executive officer Edgar Saavedra said in a statement.

“Not only did we secure our space as a transport infrastructure developer, we are also witnessing the results of our diversification plan to mitigate the natural cyclicality of construction,” Saavedra added.

While net profit was affected, earnings before interest, taxes, depreciation and amortization remained healthy at P4.76 billion, an 8% increase from the previous year, propelled by the strong performance of the airport business, Megawide said.

Boosted by the opening of MCIA’s new international terminal in July 2018, airport operations delivered revenues of P3 billion, 30% higher year-on-year, and contributed 20% to total consolidated revenues.

Together with joint venture partner Indian-based GMR group, Megawide won the concession to construct and operate Terminal 2.

Consolidated revenues, however, dropped 21% to P15.11 billion in 2018 from P19.16 billion in 2017.

Construction remains the core revenue contributor at 78%, with 20% coming from airport operations, and the balance of 2% from airport merchandising.

MCIA brought in a 15% growth in total passenger volume to 11.5 million passengers in 2018 from 10 million in 2017, with international and domestic passengers growing 23% and 12%, respectively.

Domestic passengers comprised 67% of the total passenger mix while international travelers comprised 33%. Air traffic volume likewise increased by 15% with international traffic up by 19% and domestic traffic improving 14%.

The overall improvement in passenger and air traffic was attributed to additional airline partners and higher number of domestic and international flights.

As of February 2019, MCIA is serving 30 domestic and 20 international destinations with six local and 19 international airline partners.

“We continue to see the growth in both international and local travel as an opportunity to promote Cebu not only as a destination but as a hub to other destinations in Visayas and Mindanao. We intend to make the most of these prospects by embarking on new developments within the MCIA concession area to attract more traffic and complement our existing facilities,” Saavedra said.

New contracts secured in 2018, meanwhile, reached P29.5 billion, almost three times the level in the previous year. At the end of 2018, order backlog amounted to P50.9 billion, the highest level by far in Megawide’s history.

Construction revenues slowed down in 2018 as a result of projects being in different completion stages in the order book, with projects either winding down or in the early phases of construction. Net income of P762.8 million was likewise affected by one-time finance charges related to the impairment of disputed receivables.

“We remain highly optimistic in our construction business, especially with such a robust order book which gives us visibility for the next two to three years,” Saavedra said.

“Our local property sector is thriving, not to mention the continuing opportunities in the government’s infrastructure development program. These, with our strong macroeconomic fundamentals, give us a positive outlook on construction,” he added.

Meanwhile, PITX, which officially opened in November 2018, is also expected to contribute to the company’s topline this year. From an average daily foot traffic of less than 10,000 in December 2018, PITX is currently hosting an average of at least 40,000 passengers daily.

“With the constant cooperation from the government and other stakeholders, connectivity at PITX has improved. Commuters and bus operators have started to appreciate the real benefits of the terminal,” Saavedra commented.

PITX is expected to open new long-haul routes within this month, including routes to Bicol and Quezon Province.

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