SBS Philippines Corp. reported a 90% drop in earnings in 2017 due to the absence of one-time gains and higher expenses to support its diversification program.
In a regulatory filing, SBS Philippines said it booked a net profit of P101.3 million last year, significantly lower than the P1.01 billion it generated in 2016.
“(The decrease is) due to absence of the one-off gain of P858.7 million from the sale of the company’s investment assets reflected in 2016 and increase in net finance charges incurred to support its diversification program,” the company said.
SBS Philippines has core interests in chemical trading and distribution, but has since diversified into the property and investments business in 2017 to offset fluctuations in the chemical trading business. The company said this will also provide it with a new income source.
The diversification strategy has so far led to its purchase of a warehouse facility in Calamba, Laguna previously owned by a unit of multinational beverage giant The Coca-Cola Corp. for P520 million. SBS Philippines said it will use the facility as a distribution hub for regional market customers south of Metro Manila.
The transaction was made through its newly formed unit Lence Holdings Corp., which will handle the company’s investments in warehouse facilities.
SBS Philippines’ wholly owned unit, SBS Holdings and Enterprises Corp. (SHEC) also incorporated Joine Holdings Corp. last October 2017 to handle the purchase of a 2,371-square meter (sq.m.) commercial property in Mandaluyong City.
SHEC also purchased a 54,598.17-sq.m. lot in Mandaluyong City last year as part of SBS Philippines’ investments in property.
Meanwhile, revenues in 2017 stood at P1.1 billion, 9.8% higher that what the company posted in 2016. SBS Philippines attributed this increase higher volume of sales and the increase in prices for raw materials of animal feeds.
SBS Philippines conducted a stock rights offering last December through the sale of 302 million shares at P4.67 each. Proceeds from the P1.41-billion issuance will be used to support SHEC’s capital requirements amounting to P1.2 billion, investment in property-related businesses, and general working capital requirements.
This year, the company said the prevailing weakness of the peso may impact profitability.
Shares in SBS Philippines lost 16 centavos or 2.07% to close at P7.58 each at the Philippine Stock Exchange on Tuesday. — Arra B. Francia
