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Manila Water’s Asia Expansion to Increase Profit, President Says

April 15 (Bloomberg) -- Manila Water Co. Inc.’s new ventures may make up about a third of profit by 2018 as the Ayala Corp. unit expands outside the Philippine capital to Vietnam and Indonesia.

The company that supplies water to half of metropolitan Manila plans to bid for projects in 15 areas across the Philippines, President Gerardo Ablaza said today after the annual meeting. The “aspiration” is for new businesses to account for 35 percent to 40 percent of profit in five years from 7 percent now, he said in an interview.

Profit rose 28 percent to 5.44 billion pesos ($132 million) last year, aided by ventures in Boracay, Clark and Laguna in the Philippines and its investment in Thu Duc Water BOO Corp. in Vietnam. Last year, it won a project to provide water in Cebu province, acquired 47 percent of Vietnamese water distributor Kenh Dong Water Supply Joint Stock Co. and Suez Environnement’s 51 percent stake in PT PAM Lyonnaise Jaya.

Profit growth this year may not be as robust as 2012, Ablaza said, citing regulatory delays in price adjustment and after billed volumes rose “substantially” in 2012.

Manila Water shares closed unchanged at 40.35 pesos in Manila trading. The stock has gained 26 percent this year.

The company will work with state agency Metropolitan Waterworks and Sewerage System to develop new water sources for Manila to reduce its dependence on Angat Dam as the metro’s lone source of supply, Ablaza said.

Among options being looked at are rivers that are part of the Laiban system in Rizal province, he said. San Miguel Corp. in 2010 scrapped talks on building a $1 billion dam in Laiban after failing to agree with the state agency on terms.

To contact the reporter on this story: Cecilia Yap in Manila at cyap19@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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