2016 NEWS »Consunji’s DMCI doubles capex to P40B in 2016

Consunji’s DMCI doubles capex to P40B in 2016

Posted on April 04, 2016

CONSUNJI-LED DMCI Holdings, Inc. is setting aside P40 billion for capital expenditures this year, its biggest annual outlay to date, as it expects growth in its real estate and power generation businesses.

This year’s spending plan is more than double last year’s P19.3 billion as the diversified engineering conglomerate has lined up a number of big projects for the rest of the year, it said in a statement released on Sunday.

“There is still considerable room for growth in the property market and power industry so we are focusing our resources on these areas,” DMCI Holdings Chairman and President Isidro A. Consunji was quoted in the statement as saying.

He added that this year’s spending has already been fully funded by loans secured last year and internally generated funds.

Of this year’s budget, real estate unit DMCI Homes cornered the largest share at P32.5 billion, with nearly 85% or P27.5 billion earmarked for the development costs of new projects for 2016. The rest or P5 billion will be used for land acquisitions.

This year’s big projects include the construction of a high-end condominium located in Asia World City, Parañaque, which is said to be one of the biggest development projects in the Philippines. It will be DMCI Homes’ first luxury residential development. The company will also start developing its first mixed-use building in Makati City.

“Plans are also underway for the mid-segment developer to expand outside Metro Manila and enter the low-cost housing market,” the company said.

The publicly listed holding firm has also set aside around P7.2 billion for its energy projects under Semirara Mining and Power Corp. and DMCI Power Corp.

For the integrated energy company, Semirara Mining, the group has set aside P5 billion for equipment acquisition and facilities improvement.

Off-grid power supplier DMCI Power has cornered P2.2 billion for power plant construction and equipment acquisition.

D.M. Consunji, Inc. and DMCI Mining Corp. will get about P700 million for the acquisition of additional equipment and machinery to support their operations, the company said.

D.M. Consunji is participating in a number of infrastructure projects this year, either as a bidder or contractor, the company said.

At the same time, DMCI Mining is planning to boost its nickel output to help weather the slump in global commodity prices.

Last year, DMCI Holdings said consolidated net income increased by 20% to P12.3 billion as all its investments posted strong performance.

“Our growth was driven by the strong performance of all our investments. Despite weak commodity prices and project execution delays, we were able to meet our profit guidance for the year,” Mr. Consunji earlier said.

He said this year, DMCI Holdings expects Maynilad Water Services, Inc. -- in which it has a stake through a consortium -- to contribute a lower figure as it marked the end of an income-tax holiday previously enjoyed as a water concessionaire, he said.

Maynilad reported net earnings contribution of P2.3 billion in 2015, up 17% from P2 billion, amid the continued improvement in operational performance and a 4% rise in billed volume.

Mr. Consunji also said contributions from DMCI Mining would be lower because of a 70% drop in the selling prices of nickel. He added that production might be lower because of permitting issues.

“[Contribution from] power should go up,” he said, citing expansion projects that were already bringing in returns.

He also said the company was looking for renewable energy projects and was considering a 10-megawatt (MW) mini-hydropower plant in Cagayan de Oro and a 20-MW facility in Sultan Kudarat. He also said that the company was pursuing a 23-MW biomass project.

On property sales, DMCI Holdings Vice-President and Chief Finance Officer Herbert M. Consunji earlier said sales and reservations should be up, but net income would be down because the company recognizes profit once a project is finished and not based on percentage of completion.

DMCI Holdings consolidates the interests of the Consunji family, whose businesses include construction, real estate, coal mining, nickel mining, power generation and water distribution through a number of subsidiaries and affiliates.