THE LOGISTICS and renewable energy (RE) sectors will be key drivers for SM Investments Corp.’s (SMIC) future expansion, a company official said.
“The areas of logistics and renewable energy alone have a lot of potential,” SMIC Executive Vice-President for Treasury, Finance, and Planning Erwin G. Pato told reporters on the sidelines of the BusinessWorld Forecast 2025 forum on Tuesday.
“How we look at the investments is that we want to be good at it first before we continue expanding to others. We are at that stage where we understand the logistics business much better, and that is why we continue to invest in that business. It is the same with renewable energy. That’s why, as we understand steam production better, we engage with more concession sites,” he added.
SMIC operates in the logistics sector through 2GO Group, Inc. and in the renewable energy sector through Philippine Geothermal Production Co., Inc. (PGPC).
In June last year, PGPC announced plans to build five new geothermal projects in Luzon.
“Our aim is to essentially increase our steam output supply,” Mr. Pato said.
Mr. Pato said SMIC is open to other renewable energy technologies such as solar and wind projects.
“Clean energy is a space that we’re looking at and has a lot of potential,” he said.
He also said that SMIC’s capital expenditure (capex) budget for 2025 could match this year’s.
The conglomerate announced in April that it had allocated up to P115 billion in capex for this year.
“We have to look at it because with lower interest rates and easing funding, as the Bangko Sentral ng Pilipinas (BSP) has decreased the reserve requirements, there can be opportunities to expand. It will be around the same as we have this year,” he said.
The BSP previously reduced the reserve requirement ratio for big banks and nonbank financial institutions with quasi-banking functions by 250 basis points (bps) to 7% from 9.5%.
It also reduced the ratio for digital banks by 200 bps to 4%; thrift banks by 100 bps to 1%; and rural banks and cooperative banks by 100 bps to 0%.
“How we decide on funding is we ask ourselves which one is more efficient,” Mr. Pato said.
Meanwhile, 2GO Group, Inc. is expected to see growth in its passenger volume next year.
“2GO is already in expansion mode. As we grow our routes in Iloilo, Bacolod, Cagayan de Oro and Manila, it unlocks transfer of goods and services,” Mr. Pato told BusinessWorld.
“But more importantly, as you connect the tourist areas and industrial areas, then it will spur more economic activity, and as that happens 2GO would also be better in terms of financials.”
For now, he said the company will not be exploring new routes as it intends to further grow its services in its current operations.
“There is still a lot of potential within those routes. It is not fully served yet. We are happy with the results right now, but we will look and see how we can essentially grow within those routes,” he said.
In May, 2GO launched its newest roll-on, roll-off vessel — the MV Masigla sailing to Iloilo, Bacolod, and Cagayan.
For 2024, the company had announced it would allocate up to P2 billion for capex, focusing on new containers, material handling equipment, and service enhancements.
Mr. Pato said that for next year, 2GO’s capital expenditure budget will likely be around the same level.
2GO offers multimodal transportation, warehousing and inventory management, distribution, special containers, project logistics, and e-commerce logistics. It also provides sea travel, freight forwarding, import and export processing, and customs brokerage services.
On Wednesday, SMIC stocks fell by 2.44% or P22 to P879 apiece. — Revin Mikhael D. Ochave and Ashley Erika O. Jose
