EEI Corporation

August 18, 1998 PSE CIRCULAR FOR BROKERS NO. 1916-98 EEI CORPORATION Press Release EEI FIRST HALF EARNINGS Up 80 . 3% EEI Corporation announced that it achieved consolidated net income of P187.4 million in the first six months of the year. This is up 80.3 % from the P104.0 million it posted in the same period in 1997. The Company a leading listed construction and engineering corporation registered consolidated revenues of P3.31 billion, up 36.9% from the P2.4 billion last year. Despite the economic slowdown, it managed to realize continued growth in gross production from construction contracts and sales from construction and engineering machinery and equipment it markets in the country. Rizalino Navarro, Chairman and CEO, said that EEI's strong performance stemmed from its leadership in the infrastructure and industrial construction market. "We benefited from the confidence of corporations, international construction principals and property developers who continued to value the Company's technical superiority and long history in the industry," he added. Construction accounted for the principal share in corporate revenues as it accounted for P2.98 billion, or 90.0% of gross revenues. Machinery sales contributed P202.8 million, or 6.1%, with the balance provided by subsidiaries and affiliate. The robust first semester revenues stemmed from strong orders that increased 31.8% to P6.10 billion, compared to the P4.63 billion last year. New construction contracts acquired during the period include the superstructure of the RCBC Towers in Makati, the Linden Suites in Ortigas Center, the Wrigleys chewing gum plant, the Philips Integrated Circuit production facility and, recently the $40 million Ghazlan 2,400 megawatt power plant in Saudi Arabia. EEI is the exclusive Philippine sales distributor of construction equipment and heavy machineries such as Samsung payloaders, excavators and heavy equipment, Bosch telecommunication systems, Teledyn e excavation equipment, and Kohler mining equipment. Navarro disclosed that EEI is on the way towards reaching its corporate earnings target for the whole year despite the weakness in the domestic economy. "The challenging business environment may pose difficulties in the second semester, but we are still hopeful in achieving our income forecast of P400 million in 1998," he explained. LLphil EEI has a consolidated orders backlog of P9.98 billion as of the end of June, which is equivalent to 14 months production. Furthermore, it stands to realize foreign exchange gains from the appreciation of the US Dollar from its foreign contracts and local projects sourced from international general contractors. Navarro explained that the gains will more than offset currency losses from its foreign exchange liabilities. He said that the Company is confident that it can surmount the short-term negative economic environment and anticipates a recovery in 1999/2000 which will keep it position to make a stronger performance in the coming years.