Megawide Construction Corporation said it incurred a net loss of P398 million in the first six months of 2020 due to the economic fallout from the coronavirus disease 2019 (COVID-19) pandemic.
This is Megawide’s first loss in its history, the company said in a statement on August 17, 2020.
The company, which is the majority shareholder of the GMR Megawide Cebu Airport Corporation, said the loss was caused by interest expenses and other non-cash charges amounting to P1.12 billion for the period, associated largely with the Mactan-Cebu International Airport (MCIA) concession.
Megawide said its airport operations airport suffered from the international and local travel bans that governments across the globe imposed in a bid to contain transmission of COVID-19.
The company said it recorded lower international and domestic passenger volumes of 742,000 and 1.7 million, respectively, in the first half of 2020.
International passengers fell by around 65% from 2.2 million in the same period in 2019, while domestic passengers dropped 60% from 4.3 million.
The reduction in passenger volumes affected all revenue segments.
“The situation we are in is unprecedented but we remain in high spirits for the company’s prospects moving forward. This is the reason why we are building our runway for the future, which we envision to propel us to even greater heights in the years to come,” said company chairman and CEO Edgar Saavedra.
The company’s consolidated revenues during the period was 21% lower from the previous year at P6.44 billion, with construction contributing P4.88 billion, airport operations accounting for P888 million, and airport merchandising providing P69 million.
Megawide said the revenues gained by its landport, the Parañaque Integrated Terminal Exchange (PITX), cushioned the weakness in Megawide’s traditional growth engines – the construction business, which was mostly inactive during the quarantine season, and airport operations, which suffered from international and local travel bans.
PITX delivered revenues of P599 million and a net income of P255 million in the first six months of the year, contributing 40% to the company’s consolidated earnings before interest, taxes, depreciation and amortization (EBITDA).
The company’s consolidated EBITDA amounted to P1.45 billion.
“When we inaugurated PITX two years ago, we were very excited about its social impact and business prospects. Barely one year of full-blown terminal and commercial operations, we are starting to reap the benefits of this undertaking – not just for the company but more importantly for our commuting public,” Saavedra said.
Megawide said its construction business maintained a healthy order book of P48 billion despite the absence of new contracts due to the slowdown in property development and project launches from real estate players.
The company, however, is close to securing new contracts in the second half of the year, worth at least approximately P10 billion, to beef up its order book.
Megawide said it has developed a Runway to Resilience Program post-COVID, anchored on four points: 1) Push Back, 2) Rev Up, 3) Full Throttle, and 4) Take Off.
The company will prioritize its financial and operational health and will (1) Push Back on unnecessary costs and expenses as well as eliminate inefficient processes and resources.
To support this, Megawide will (2) Rev Up its digitalization efforts, liability management initiatives, and occupational health and safety practices to meet the objective.
The company believes this foundation will enable it to go (3) Full Throttle to seek new projects, build up its non-human capital and capacity, and explore strategic funding to support these goals.
Once cleared, the company expects to (4) Take Off to its portfolio expansion program and a bigger infrastructure platform, and an opportunity to forward integrate with complementary businesses within the Group to build a stronger yet more agile organization.
“We are aware that there will be significant headwinds that will come our way as we pursue this path but we trust in our experience, rely on the strengths gained throughout the years, and remain firm on our vision towards Engineering a First-World Philippines,” Saavedra added. (Ventures Cebu)