Contractors enjoy brisk business
Friday, May 25, 2012
Given the robust property market and a resurgent infrastructure spending, construction companies are enjoying brisk business if we go by the performance of the listed firms.
EEI Corp. of the Yuchengcos posted profit of P214.9 million in the first quarter, an increase of 81 percent from the P118.6 million last year. Its consolidated revenues reached P3.27 billion, 94 percent higher than last year’s P1.69 billion.
“This is attributed mainly to the 89 percent increase in revenue provided by construction contracts, from P1.31 billion in the first three months of 2011 to P1.48 billion for the same period in 2012,” the company said.
“Also contributing significantly to this growth was the revenue generated from services which increased by 150 percent from P297.4 million to P744.5 million in the first quarter of this year,” it added.
The company, one of the biggest contractors in the Philippines, said its closed new construction contracts for the period which secures the company’s business for years to come. Last year, EEI had a backlog of P11.29 billion.
For the period, the company was awarded seven new local construction projects worth P4.31 billion.
These include the contracts to construct the Novotel Manila Hotel of Araneta Center Hotel, inc. in Quezon City; the Green Residences of SM Development Corp. in Manila; the Eastwood LeGrand 3 of Megaworld in Quezon City; the Levels Condominium Phase 1-A of Filinvest Land, Inc. in Alabang, Muntinlupa; contract packages of the Didipio process plant for Oceana Gold Philippines, Inc., in Nueva Vizcaya; the asphalt plant facility of Petron Corp. and; the autoclave installation works for Taganito project in Claver, Surigao del Norte.
The company also provides construction services overseas. Last year, EEI won new contracts worth P11.75 billion.
Megawide Corp., another listed contractor, meanwhile said profit for the first quarter jumped 154 percent to P264 million from P104 million in 2011, as the company also improved its number of contracts.
Gross revenues reached P2.21 billion, 63 percent compared to the P1.35 billion recorded a year ago.
“The increase in contract revenues and its corresponding costs is due mainly to the ongoing and newly-awarded projects: Linear, Studio City and Studio Zen of Filinvest Land, Inc. Jazz Phase 2 and Grass Tower of 2 of SM Development Corp.,” Megawide said.
Megawide is also participating in the government’s public private partnership (PPP).
Louie Ferrer, Megawide chief information officer, was quoted earlier as saying that the company is interested in the development of state-run hospitals as well as school buildings under the PPP. Some of the initial projects are the improvement of the National Orthopaedic Hospital and the P10.4-billion school infrastructure project.
Megawide is eyeing 14 new projects for the year.
DM Consunji, Inc. (DMCI), the construction arm of holding firm DMCI Holdings, Inc., meanwhile expects new infrastructure contracts to boost its profit for the rest of the year.
DMCI Holdings in its quarterly filing said that despite a growth in revenues, DMCI’s contribution to the mother company dropped to P282 million compared to P362 million last year.
“This was mainly due to the lower margins of the majority building projects being worked on currently versus the infrastructure projects last year. Notable accomplishments in the Entertainment City… and other building projects provided most of the boost in revenues; but since these building projects have practically lower margins than infra projects, the construction bottom figure didn’t go up proportionately,” DMCI Holdings said.
As the company attracts more projects to its portfolio, the company expects profits to improve. The company said it expects better numbers with the inclusion of new coal power plant projects.
“DMCI’s orderbook as of March 31, 2012 reached P20 billion, 25 percent up from P16 billion a year ago. Bulk of the balance of work is coming from the Entertainment City and the coal power plant contracts and doesn’t even include the MRT-7 railway project…” DMCI Holdings said.
The construction of MRT-7 was recently awarded recently by San Miguel Corp. to DMCI.
“Although delayed, the company believes the infrastructure development programs of the current Philippine government will inevitably materialize. As such, the company through DMCI, is very much interested in the construction of these initiatives. The company believes it is well positioned to be a driver and a beneficiary of the country’s infrastructure progress,” DMCI Holdings added.
Normally led by private sector initiatives, the construction sector is getting a boost from government’s pronouncement of infrastructure spending. This encourages companies to invest more in their businesses in the Philippines.
The government is banking on several big-ticket projects under the PPP to stimulate more activities in the economy.
Among these are the P900-million Vaccine Self-Sufficiency Program of the Department of Health; the P25-billion Metropolitan Waterworks and Sewerage System New Water Supply project; a P20.18-billion North Luzon Expressway-South Luzon Expressway Connector Road; a P10.15-billion Mactan Terminal 2 Airport Development; and the P8-billion New Bohol Airport, which is included in the government’s public-private partnership program (PPP).
The list also includes the P20-billion Balara water hub; P19.69-billion CALA (Cavite and Laguna side) expressway; P11.3-billion Light Rail Transit 2 East Extension and the first phase of a P10.4-billion PPP of the School Infrastructure Project.
These projects are driving confidence among construction companies that the year 2012 will be a good year for them.
“With the developments in the industries that EEI Corp. serves, its management is optimistic that the company will meet its year-end goals,” it said.