EEI To Earn P400 Million in 1998

March 13, 1998 PSE CIRCULAR FOR BROKERS NO. 365-98 EEI TO EARN P400 MILLION IN 1998 Publicly-listed EEI Corporation announced that it expects to post a net income after tax of P400 million this year. In a briefing to brokers and investors, the company said that the robust earnings forecast will come from continuing operations including foreign exchange gains from its dollar-dominated construction contracts in the country and foreign projects with an estimate revenue of about US$56 million in 1998. EEI president and chief operating officer Rogelio Murga explained that the company had to book net currency losses as a result of the peso devaluation last year from its foreign currency denominated liabilities and assets and incurred high interest cost. These led to the decline of EEI's consolidated net income last year to P63.5 million. LLphil "EEI's strong presence in infrastructure and industrial construction, as well as overseas-sourced projects has provided a hedge against the financial uncertainties, " Murga said. The company also reported that its Board of Directors approved the sale of its investment in Subic Power Corporation where it expects to record a non-recurring gain of about P300 million. Murga expressed confidence that the company will be able to meet the economic downturn and build a base from which it can strengthen its dominant industry position across all sectors of the construction market. EEI had recorded consolidated gross revenues of P5.91 billion in 1997, up 23% from the previous year's P4.82 billion. Consolidated net earnings declined from P264.4 million in 1996 to P63.5 million last year. Despite the currency crisis and the weaker domestic economy in the second half of 1997, EEI managed to post strong revenues stemming from robust sales and orderbook. Consolidated construction contracts and merchandise sales and indent orders from machineries and systems distributed by the company totaled P8.63 billion, up 16% from the previous year's P7.40 billion. Construction remained the biggest contributor to consolidated orders, bringing in a total of P6.21 billion in new contracts last year. The Machinery Division contributed P1.24 billion in sales. Consolidated orders backlog amounted P7.39 million, which is equivalent to 12 months production. This translates to a 37% increase compared to last year's P5.39 billion. The company - the country's leading industrial construction and engineering firm - books its revenues from percentage completions against contracts and booked sales from its machinery division. EEI continued to obtain additional contracts this year for a broad range of industrial, structural and electro-mechanical construction, as well as engineering works such as the Wrigley's Philippines chewing gum plant, Philips Semicon expansion, and the MHI - Nagasaki Mindanao geothermal power plant. It also acquired major landmark high-rise building contracts for the construction of the sub-structure of RCBC Plaza and general construction of the Philamlife Tower in Makati and Pacific Plaza Tower in Fort Bonifacio zone last year, effectively expanding into the property sector. It was also recently awarded the construction of the Linden Suites of Madeira Holdings.