MANILA (AFX-ASIA) – Manila Electric Co B shares have been holding steady after the company’s first half results came in within expectations, dealers said.

Meralco said its first half net profit dropped to 465.245 million pesos from 952.995 million pesos a year ago. (US$1=50 peso). In the second quarter, it made a net profit of 538.043 million pesos against 558.623 million a year earlier.

“It’s already expected by the market that Meralco’s profit would be down given the performance in the first quarter,” analyst Mark Alan Canizares said, referring to the 72.8 million pesos net loss posted by the company in the three months to March.

“Everyone also expects that profits will be down for the year and that has been factored into the price.”

Mr Canizares said he is expecting Meralco to achieve a net profit of 1.1 billion pesos for the full year, compared to 1.48 billion in 2001.

Analysts said the rise in systems losses seen by Meralco in the first half was also no surprise, following its cutbacks on capital expenditures due to the delays in its rate hike.

Meralco said systems losses in the first half increased to 12.14% from 11.23% a year earlier, though the expenses related to this had declined due to the lower purchased power adjustment costs.

“They don’t have enough money to spend on additional equipment and capital spending,” Mr Canizares said.

Power sales are also expected to remain sluggish going forward, after a 1.9% contraction in the first half.

Jose Vistan Jr, analyst at AB Capital Securities, said manufacturers will likely slow activity in the second half due to weak sentiment in the US, dampening industrial power sales.

In the first half, industrial power sales were down 1.4% year-on-year.

“The weather is somewhat colder, so the usage of airconditioning will go down,” he said.

“We have yet to see the manufacturing numbers, but based on the latest import figures, we’re going back to cautiousness after some degree of confidence was realised in the first half,” Mr Vistan said.

“The recovery in the second half is a bit doubtful because of the problems in the US.”