Manila Electric Company

For the first nine months of 2025, Meralco reported consolidated core net income of PHP 40 billion, up 14% from PHP 35.1 billion, and consolidated reported net income of PHP 36.8 billion, up 9% from PHP 33.8 billion. Core EBITDA rose 14% to PHP 67.2 billion, consolidated revenues increased 5% to PHP 371.8 billion, and costs and expenses rose 4% to PHP 332.3 billion. Capital expenditures were PHP 78.8 billion, cash and cash equivalents were PHP 88.2 billion, and consolidated debt was PHP 213.4 billion. Core EPS was PHP 35.509, up 14%, while reported EPS was PHP 32.67, up 9%. For guidance, management said DU volumes could end the year around 0.5% to 2.8% negative, and Terra Solar Phase 1 may declare COD by August 1, 2026, with Phase 2 by February 2027. MGen also guided EBITDA for Terra Solar to be north of 80%, with average cost of debt around 7%.

Management described the quarter as a period of solid execution across a more diversified generation portfolio, with LNG, thermal, and renewables all contributing to earnings and grid support. The CEO-level commentary emphasized disciplined growth, continuing project development, and the need to build an energy future that is secure, reliable, and sustainable. Tone-wise, leadership was constructive but cautious, especially on near-term demand softness, Terra Solar execution, and fuel supply volatility.

The CFO said the earnings increase was driven by robust generation performance and steady distribution, with the DU still contributing the largest share of core net income at PHP 21.9 billion, or 55%, and generation contributing PHP 14.7 billion, or 37%. She highlighted revenue of PHP 371.8 billion, core EBITDA of PHP 67.2 billion, capital expenditures of PHP 78.8 billion, cash of PHP 88.2 billion, and debt of PHP 213.4 billion, noting that all consolidated debt is in Philippine pesos and net debt to EBITDA was 1.5x. She also explained that the gap between core and reported net income was driven by day-one gain adjustment, foreign exchange loss, and gain on sale of assets, and said the recent provision write-backs were related to real property tax settlements, not rate reset assumptions.

Analysts focused on DU volume softness, the generation/distribution earnings mix, regulatory reset timing, Terra Solar progress, LNG exposure to fuel price volatility, and the impact of indigenous gas prioritization. Management said Q4 DU demand should remain weak due to La Niña and that full-year DU volume could finish at about 0.5% to 2.8% negative, but they expect an uplift next year as weather normalizes and occupancy improves. On Terra Solar, management said Phase 1 is 65% complete, with COD allowed up to August 1, 2026, while on LNG they said fuel volatility is generally passed through and that the generators are contracted on capacity, with a pipeline connection to Malampaya expected to be ready to accept gas after December 16, 2025. On regulation, management said the ERC’s trending method is effectively a form of revaluation, and that indigenous gas prioritization currently applies only to ING versus LNG, not yet to coal or other conventional sources.