By Denise A. Valdez, Reporter

WHILE the economic consequences of the global coronavirus crisis remain unclear, this black swan is shaking up both corporate and consumer behavior in a big way. It has precipitated massive changes across industries, showing that not even the world’s corporate giants are immune to the pandemic.

In the Philippines, a number of blue-chip companies have cut capital spending and suspended expansion plans this year, some of them laying off workers to stay afloat. Some of these big companies were forced to shift their focus to their main businesses, ruling out investments in new ventures.

While big companies make up less than 1% of Philippine enterprises, they provide about 3.33 million jobs, or more than a third of the country’s workforce, based on 2018 data.

“I think it is best to be financially prudent,” Manuel V. Pangilinan, chairman of the MVP Group of Companies that has interests in water, power, telecommunications, tollways and healthcare, said at an online media briefing last month.

“We believe that the focus of management has got to be on the existing operations and existing business portfolio of Metro Pacific Investments Corp. (MPIC),” he said, adding that MPIC had “no energy” to invest in new projects, especially overseas.

MPIC, the listed investment company of the MVP Group, is halving its 2020 capital expenditure to P80 billion as it cuts investments in new ventures such as hospitality and logistics. Earnings plunged by 47% in the first quarter from a year earlier to P1.9 billion after the main Philippine island of Luzon was locked down in mid-March to contain the pandemic.

President Rodrigo R. Duterte suspended work, classes and public transportation, ordering Filipinos to stay home except to buy food. He extended the strict quarantine twice for the island and thrice for Metro Manila, where infections are mostly concentrated.

The metro lockdown has been relaxed since June 1 and some businesses have been allowed to reopen with minimal workforce.

“We all say let’s get to the next few months and see where things shake out, because the whole world is second-guessing what recovery may look like,” MPIC Chief Finance Officer David J. Nicol said by telephone on May 24. “Everybody talked of V-shaped and U-shaped recovery, and now I see people talking about a long L. You know, none of us know.”

Fastfood giant Jollibee Foods Corp., which has given McDonald’s Corp. a run for its money in the Philippines, is cutting capital spending to P5 billion from P14 billion.

Property developer Ayala Land, Inc. told stockholders on April 22 it was reducing spending to P70 billion from P110 billion, while port operator International Container Terminal Services, Inc. told the stock exchange on April 24 it was trimming its capex to $100 million from $400 million.

“One thing that we’ve realized during this crisis after some quick self-reflection is, it is very difficult to plan long-term in an environment like this,” Ayala Corp. Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala told stockholders at a virtual meeting on April 24.

Earnings of Ayala Corp., the parent company of Ayala Land that has interests in property, banking, telecommunications and water utility dropped by 17% to P6.7 billion in the first quarter after profit at its property, banking and industrial segments fell.

“There is no existing playbook for this kind of situation,” Mr. Zobel said. “We will be monitoring consumer behavior, market behavior, industry regulatory issues and just make an assessment of how the world has changed for us.”

Cebu Air, Inc., which was forced to stop operating budget carrier Cebu Pacific on March 19 due to travel restrictions worldwide, is likewise preparing for a new environment once the situation stabilizes and lockdown measures are eased.

“We are assessing our recovery plan, as the situation remains fluid,” Alexander G. Lao, vice- president for commercial planning at Cebu Air, said in an e-mail. “For now, we are planning for a gradual introduction of our network, but it depends on how things progress.”

He said one key challenge is how travel patterns would change after the quarantine. “While we believe leisure travel will rebound, some other segments will change. Business travel will probably be less as people get used to online meetings.”

The airline operator posted a net loss of P1.18 billion in the first quarter after making a profit of P3.36 billion a year earlier. Passenger revenue went down by more than a quarter to P11.39 billion.

The airline industry has sought support from the government through emergency credit lines, waiver of fees and wage subsidy. Lawmakers have drafted measures including capital infusion to support some industries such as airlines and tourism.

Cebu Air parent JG Summit Holdings, Inc. cut its capital spending this year to P58 billion from P82 billion.

During a stockholders’ meeting on May 14, JG Summit President and CEO Lance Y. Gokongwei said Cebu Air was renegotiating payment and delivery schedules for its aircraft orders. Before the pandemic, the company had planned to replace its older aircraft and expand its fleet to 83 aircraft by 2022 from 75 last year.

Meanwhile, Aboitiz Equity Ventures, Inc. has also cut its spending to P47 billion from P73 billion.

“During the Asian financial crisis, our decision to remain financially prudent (we did not hold any debt) bid well for the company,” said Sabin M. Aboitiz, president and CEO at the listed holding company that has interests in power, banking, food, infrastructure, property and construction.

“We expect the same approach to benefit us as we face the COVID-19 crisis,” he said in an e-mail.

Aboitiz Equity’s net income fell by 42% to P2 billion last quarter, dragged by a 43% drop in contributions from its power unit.

During the pandemic that has sickened more than 18,000 and killed almost a thousand people in the Philippines and in which as many as 10 million people could get laid off, workers at bigger companies are more likely to keep their jobs, Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc. said in a May 21 e-mail.

“Since these companies are huge and well-capitalized, they are poised to overcome the challenges of an economic crisis due to the pandemic, and they can even lend direct support to government efforts directly related to the containment of the virus,” he added.

Cutting capital spending may be the only way for companies to stay afloat, Jervin S. de Celis, a trader at Timson Securities, Inc. said in a mobile phone message. “While this may negatively affect the labor and employment conditions in the country for now, these companies have to survive so they can hire back people when the pandemic is over.”

Talks of a “new normal” have never left boardrooms, but Mr. Asuncion thinks some sectors will find it difficult to adjust until a COVID-19 vaccine is found.

Those offering essential goods and services are expected to recover within months, while nonessential ones such as travel and tourism may take longer.

The Philippine Stock Exchange index (PSEi) has remained volatile, trading between 5,400 and 5,900 since April.

The bourse has since recovered after falling to a record 4,623.42 points on March 19, but foreign investors have been net sellers for 49 out of 52 days from March 12 to May 29.

“The stock market has not digested the full information and may have to wait until earnings results come out,” Mr. Asuncion said. “It will have to adjust soon enough, taking into account potential losses, spending and earnings decline,” he added.

The stock index is likely to end the year at 6,200 to 6,600 points, according to estimates from brokerages BPI Securities Corp. and First Metro Investments Corp.

Mr. Nicol of MPIC said it might take a while before the company goes back to the level it was at when the year started.

“There could be a very sharp contraction in the second quarter,” he said. “The third and fourth quarters will still be below where we were last year. But there will be a distinct uptick trajectory each quarter.”