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Surigao airport initial rehab seen complete by Dec.

SURIGAO Airport is scheduled to reopen for direct flights connecting to Manila by the end of the year with the expected completion of rehabilitation works on its runway.

The Department of Transportation (DoTr) said in a statement Friday it has hired a new contractor for the airport, which is expected to finish the development project by December.

“As instructed by Secretary (Arthur P.) Tugade, focus shall be given on this project so as to make sure that no further delays will be incurred,” Transportation Assistant Secretary for Procurement and Project Implementation Giovanni Z. Lopez said in the statement.

Surigao Airport has been under maintenance since 2017 when it sustained damage after being damaged in a magnitude 6.7 earthquake.

The DoTr said it hired Pacific Concrete (PC) to take over the rehabilitation works after Herbana Builders, the original contractor, was “terminated due to abandonment of the project that led to its continuous disrepair.”

“According to the revised plan, PC shall complete the ongoing preparatory works for the asphalt overlay of the existing 1,000-meter usable runway and the rehabilitation of the unusable portion that was damaged by the magnitude 6.7 tremor,” the DoTr said.

The new contractor was also tasked to expand the runway by 400 meters by the end of the year, and to add 300 meters more by February 2020 to restore the runway’s full length of 1,700 meters before it was damaged.

“Our priority is to be able to complete the extension of the runway to 1,400 meters by end of this year. A longer runway will enable the airport to accommodate bigger aircraft,” Director General Jim C. Sydiongco of the Civil Aviation Authority of the Philippines (CAAP) said. — Denise A. Valdez

Manila Water CEO resigns for ‘personal reasons’ after March supply crisis

MANILA Water Co., Inc. announced on Friday the resignation of Ferdinand M. dela Cruz, who cited “personal” reasons, marking the departure of the president and chief executive officer who was in office at the height of the water crisis that hit Metro Manila’s east zone concessionaire early this year.

He will also leave his other posts in the company, where he also served as director, chief sustainability officer and member of its executive committee. His resignation will take effect on Aug. 31, 2019.

“Our Board of Directors, at its meeting held this afternoon, accepted the resignation of Mr. dela Cruz and elected Mr. Jose Rene Gregory D. Almendras as President, Chief Executive Officer, and Chief Sustainability Officer effective 01 September 2019, as endorsed by our Nomination Committee,” Manila Water told the stock exchange.

Separately, Manila Water’s parent firm Ayala Corp. announced Mr. dela Cruz’s resignation as managing director of the listed diversified conglomerate and that he had availed of early retirement effective Aug. 31, 2019 because of “personal matters.”

Manila Water said its board approved the election of Fernando Zobel de Ayala as chairman of the executive committee in place of Mr. Almendras and as member of the executive committee to replace Mr. dela Cruz effective Sept. 1. The board also elected Sherisa P. Nuesa as member of executive committee effective immediately.

Manila Water said that before Mr. Almendras joined the government in June 2010, he served as the company’s president and chief operating officer from March 30, 2009. It said it was during his time that the company achieved a 100% customer satisfaction rating.

It also said that Mr. Almendras was instrumental in the expansion and growth of the company beyond the east zone.

During his term, Manila Water said it was named one of the “Best Managed Companies in Asia, the Best in Corporate Governance, one of the Greenest Companies in the Philippines, and hailed as the world’s Most Efficient Water Company.”

“In 2011, he was recognized by the World Economic Forum as the new Sustainability Champion for his efforts as President of the Company,” it added.

Mr. dela Cruz’s resignation happened in the same week that the Supreme Court upheld fines amounting to nearly P2 billion on state-led Metropolitan Waterworks and Sewerage System (MWSS) and private concessionaires Manila Water and Maynilad Water Services, Inc. for violations of environmental law.

The court voted unanimously, 14-0, to uphold the decision of the Court of Appeals that found the water agency and its concessionaires liable for violating Section 8 of Republic Act No. 9275, or the Philippine Clean Water Act of 2004.

Maynilad and Manila Water are each jointly liable with MWSS to pay P921.5 million covering the period May 7, 2009 to Aug. 6, 2019 or the date of promulgation of the decision. The court also fined them the initial amount of P322,102 per day subject to 10% increase every two years until full compliance with RA 9275.

In April, MWSS imposed a penalty on Manila Water amounting to P1.134 billion, including a P534.05 million fine and P600 million to help fund the development of a new water supply source. The fine will be refunded to consumers.

The penalty is in relation to the water shortage that started in March in the area being served by the concessionaire.

The company eventually voluntarily waived the minimum charge for its entire client base in March. It also waived a full month’s bill for its most severely affected customers at a cost of nearly P500 million, Mr. dela Cruz earlier said.

Mr. Dela Cruz announced the waiver scheme on March 26 to compensate customers after the water shortage hit them. He had said that if the computation is confined to the waiver of the minimum charge, the cost could reach P150 million.

Before him, Manila Water accepted the resignation in April of Geodino V. Carpio, its chief operating officer, who took “early retirement.” Mr. Carpio first faced reporters on March 12 to explain the water supply problems, which the company said started on March 6.

On Friday, Manila Water fell 1.32% to close at P22.50. — Victor V. Saulon

RLC Q2 net profit rises 22% after opening four new malls

ROBINSONS Land Corp. (RLC) said net profit rose nearly 22% in the second quarter, reflecting the performance of its commercial centers business after the opening of four new shopping malls.

The property developer reported attributable net income of P2.17 billion in the second quarter, up 21.9% from a year earlier.

Revenue grew 18.8% to P8 billion during the three-month period, after a 19.4% increase in revenue real estate operations to P7.45 billion. Hotel operations added P558.7 million, up 11.3% from a year earlier.

Year to date, RLC’s attributable net income is up 20.4% at P4 billion.

Revenue in the first half of the year grew 12.9% to P14.79 billion, of which real estate accounted for P13.71 billion, up 13.1% from a year earlier. Revenue from hotel operations rose 10.6% to P1.08 billion.

“We continue to post strong earnings growth as we remain optimistic about new opportunities. We look forward with much enthusiasm to an even better financial performance in the near future,” RLC President and Chief Executive Officer Frederick D. Go said in the statement.

By business segment, the company’s commercial centers division accounted for 44% or P6.45 billion of revenue, up 11% from a year earlier. This was driven by the growth of mall rental revenue and returns from four new malls opened last year: Robinsons Place Ormoc, Robinsons Place Pavia, Robinsons Place Tuguegarao and Robinsons Place Valencia.

The residential business accounted for 31% of total revenue, totaling P4.67 billion in the first half, up 5% from a year earlier.

Its office buildings segment accounted for 16% or P2.31 billion, up 29% from a year earlier, driven by an increase in rentals and higher renewal rates recorded during the period. The opening of three new offices last year, Exxa Tower, Zeta Tower and Cyberscape Gamma, also added to the increase.

Hotels and resorts accounted for 7% of revenue at P1.08 billion, up 11% from a year earlier, due to the strong performance of Summit Magnolia, Summit Galleria Cebu and Go Hotels branches in Palawan, Bacolod and Davao. Its new hotels, Summit Tacloban, Go Hotels — Iligan and Dusit Thani Mactan Cebu Resort, also helped drive growth as well.

Revenue from the industrial and integrated development division amounted to P269.2 billion, up 369% from a year earlier, because of the “partial upfront recognition of revenue from a land sale and lease revenues from the Sucat warehouse.”

RLC said it spent P9.38 billion in the first half of the year from its capital expenditure allocation of P27 billion for 2019.

It said it remains on the lookout for opportunities to expand its various businesses and is open to joint venture projects with property owners and developers. — Denise A. Valdez

PSE revamps sectoral indices to admit Phinma Energy, DM Wenceslao, Sta. Lucia

THE Philippine Stock Exchange revamped its sectoral indices, admitting three new companies and removing one, while leaving the benchmark 30-member PSE index (PSEi) intact.

The bourse said in a statement Friday it has updated the list of index members following its regular index composition review that covered the July 2018 to June 2019 period.

Phinma Energy Corp. will now be added to the industrial index. D.M. Wenceslao and Associates, Inc. and Sta. Lucia Land, Inc. will join the property index, from which Philippine Realty Holdings Corp. will exit.

“Our periodic review of the PSEi ensures that the index members continue to be the top companies among those that meet the Exchange’s standards on free float level, liquidity and market capitalization,” PSE President and Chief Executive Officer Ramon S. Monzon said in the statement.

“This exercise gives us the most suitable representatives of the Philippine stock market’s main barometer,” he added.

The changes in the indices will take effect Aug. 19.

The composition of the financials, holding firms, services and mining and oil indices will remain unchanged.

The sectoral indices are made up of companies that meet the PSE’s float requirement of 15% and are among the top 50% in median daily trades per month during the review period.

Nine firms make up the financials index, 25 the industrial index, 14 the holding firms index, 19 the property index, 23 the services index and seven the mining and oil index. — Denise A. Valdez

Phoenix Petroleum Q2 net falls 8.4% on strong growth in costs

PHOENIX Petroleum Philippines, Inc. said net profit attributable to the parent firm fell 8.4% in the second quarter to P486.24 million, according to its quarterly financial report, in part as cost and expenses as well as other charges rose during the period.

“Against a backdrop of challenging operating conditions, we continue to invest and build on our long-term competitive advantages. We are building scale to drive efficiency in fuels and LPG. We are investing in the brand and more importantly, in capabilities that will allow ourselves to adapt and innovate in markets,” Henry Albert R. Fadullon, Phoenix Petroleum chief operating officer, said in a statement.

Revenue during the quarter hit P27.11 billion, up 22.3%, a growth rate outpaced by the 22.5% rise in cost and expenses to P26.06 billion. Other charges also increased significantly by 78.7% to P524.71 million.

In the first half, Phoenix Petroleum announced a 7.5% drop in net profit to P896.83 million despite a 27.2% year-on-year increase in revenue to P51.20 billion.

Operating income increased by 22% to P2.07 billion, fueled by retail growth and new businesses such as liquefied petroleum gas (LPG) and PNX Petroleum Singapore Pte. Ltd.

Phoenix Petroleum said its Singapore business, which derived 39% of its volume from third-party customers, grew its volume by 89%. It said the unit since starting its operations in November 2017 has improved inventory cost management and enhanced efficiency as it leveraged the scale of the consolidated volume of the domestic business, and local and overseas external customers.

“Phoenix Petroleum continued to deliver on its strategic priorities, growing retail volume by 17% in the first half of 2019 behind the continued network expansion and improved operating efficiencies. A total of 630 stations have been opened nationwide as of June 2019,” the company said.

“The non-fuel retail business increased revenues by 5% as total chain sales of FamilyMart grew 5% year-on-year. FamilyMart added five stores and had 76 stores as of end June. Its focus on food sales and expense discipline continues to improve profitability,” it added.

In the LPG business, the first-half volume increased by 24% year-on-year with strong operations in Visayas and Mindanao, and the expansion in Luzon.

“VisMin volume grew 16% in the first half and accounted for 87% of volume. Luzon volume increased 85% and contributed 13% to the total volume versus 4% prior to the acquisition and operation by Phoenix,” the company said.

On Friday, shares in the company fell 3.48% to close at P11.10. — Victor V. Saulon

Cebu Pacific launches Narita, Bacolod, Iloilo services out of Clark

BUDGET carrier Cebu Pacific said it launched three new routes — two domestic and one international — out of Clark International Airport Friday.

The budget carrier launched yesterday service to Bacolod, Iloilo, and the Japanese gateway Narita, which becomes the fourth international route for Cebu Pacific operating out of Clark.

The carrier is also scheduled to launch a Clark-Puerto Princesa service by the fourth quarter.

Lance Y. Gokongwei, president and chief executive officer of Cebu Pacific, said at a launch event in Clark that the company wants to keep expanding its footprint at the gateway.

He said the four new routes to be opened this year will raise the carrier’s total capacity in the northern hub by 40% by the end of 2019.

“By the end of 2019, Cebu Pacific will be the largest carrier in Clark in terms of capacity with over 28% of all seats offered (by all airlines in Clark) and over 184 flights per week across all our routes, including the upcoming Clark-Puerto Princesa route which we will be launching in October,” he said.

The flights from Clark to Bacolod and Iloilo will be offered daily, while the service to Narita will run Mondays, Wednesdays, Fridays and Sundays.

“We have been operating flights in and out of Clark since 2006. The opening of these new routes is a testament of how committed we are to continuously develop this hub,” Mr. Gokongwei said.

The carrier’s other destinations served from Clark are Cebu, Caticlan, Tagbilaran Davao, Singapore, Macau and Hong Kong.

Cebu Pacific is aiming to hit its milestone of flying 200 million passengers by next year, and of 300 million passengers by 2022. It is committing to spend about P27.1 billion for capital expenditures this year for the acquisition of new aircraft. — Denise A. Valdez

Max’s Group net profit rises 9.4% in Q2 amid improved margins

Max’s Group, Inc. (MGI) said earnings grew 9.4% in the second quarter amid stronger margins due to improved product bundle offerings and heightened productivity from efficiencies realized at its commissaries and supply chain.

The listed casual dining restaurant group reported a net profit of P227.88 million in the three months to June, up 9.4% from a year earlier.

Systemwide sales grew 5.9% to P5.14 billion, while total revenue increased 4.8% to P3.68 billion.

MGI Chief Operating Officer Ariel P. Fermin attributed the stronger returns to the “heightened brand relevance, improving market conditions, and the effectiveness of our enterprise-wide productivity measures.”

“Similar to previous quarters, we have consistently delivered profitable growth. We aim to continue expanding our margins through more profitable bundles, commissary modernization, and supply-chain integration,” he was quoted in a statement as saying.

In the six months to June, net profit was P366.45 million, up 10.4% from the same period last year.

Systemwide sales rose 4.7% to P9.72 billion year-to-date, while total revenue increased 4.5% to P7.04 billion.

Sales from the company’s network of restaurants rose 2.1% to P5.7 billion in the first half. Commissary sales also increased 7.6% to P860.1 million, and franchising and other revenue by 37.1% to P460.8 million. MGI attributed the growth to the expansion of its franchising operations.

Partnerships with online aggregators to expand in-house delivery operations also pushed MGI’s online and delivery sales in the first half, growing 13% to P845.5 million.

“We remain steadfast in our commitment to balance daily quality management with investments that will future-proof our business… In order to bolster our current performance and fuel our topline gains, we will continue to explore partnerships with these online platforms and strategically invest in our brands,” MGI President and Chief Executive Officer Robert F. Trota said in the statement.

The company opened 28 new stores in the six-month period, six of which are located overseas. Its network now covers 711 branches globally, of which 57 are in North America, Middle East and Asia.

MGI handles brands such as Max’s Restaurant, Pancake House, Yellow Cab Pizza, Krispy Kreme, Jamba Juice, Max’s Corner Bakery, Teriyaki Boy, Dencio’s, Sizzlin’ Steak, Maple, Kabisera, Le Coeur De France and Singkit. — Denise A. Valdez

Phinma Petroleum unit enters appraisal period on Palawan offshore concession

PHINMA Petroleum and Geothermal Inc. (PPG) said Friday that its unit had notified the Department of Energy (DoE) about the entry of the Service Contract (SC) 55 consortium into the appraisal period.

The entry includes the commitment to drill one deepwater well within the first two years of the appraisal period, it told the stock exchange.

PPG’s subsidiary Palawan55 Exploration & Production Corp. holds a 37.5% participating interest in the consortium and is the operator of SC 55.

It said the consortium “may undertake a new 3D seismic program to mature other prospects within SC 55 to drillable status” after the reinterpretation of certain seismic data outside of the current study area.

It also said the SC 55 consortium submitted an indicative appraisal work program to the DoE to support its commitment.

Separately, listed firm Pryce Corp. made a similar announcement. Its subsidiary Pryce Gases, Inc. (PGI) has 25% a participating interest in SC 55.

PGI is principally engaged in the importation, distribution, and retail sale of liquefied petroleum gas (LPG).

Last month, PPG and Pryce Corp. announced that the consortium decided to step up its exploration contract offshore Palawan that may involve the drilling of an appraisal well. They said the consortium will enter sub-phase 5 of SC 55.

The move is to take effect on Aug. 26, 2019, but without prejudice to the consortium exercising its option to enter the appraisal period on or before that date.

Pryce Corp. said the entry into the sub-phase would mean the drilling of one ultra-deepwater well at the cost of at least $3 million.

SC 55 is a deep-water block in the southwest Palawan Basin that covers an area of 9,880 square kilometers.

“It is in the middle of a proven regional oil and gas fairway that extends from the productive Borneo offshore region in the southwest, to the offshore Philippine production assets northwest of Palawan,” Pryce Corp. has said.

PGI acquired its interest in SC 55 in July 2015 through a farm-in agreement with Otto Energy Philippines, Inc., former operator and ex-consortium partner in the service contract.

On Friday, Pryce Corp. rose 2.54% to P5.25, while those of PPG fell 0.99% to P6.00. — Victor V. Saulon

Shakey’s Q2 net profit rises 8% on store expansion

Shakey’s Pizza Asia Ventures, Inc. (SPAVI) said its net profit rose in the second quarter, reflecting the impact of its store network expansion.

It said in a regulatory filing that net profit rose 8% year-on-year in the second quarter, to P229.37 million.

Revenue in the three-month period increased 4.8% to P2.01 billion, outpacing the 3.2% increase in cost of sales to P1.41 billion.

For the first half, net profit was P417.75 million, up 5.5% from a year earlier.

Revenue grew 4.4% to P3.85 billion, after system-wide sales rose 7.7% to P4.96 billion.

System-wide sales are the combined sales of company-owned and franchise stores of SPAVI. The company said its growth in the first half was driven by the consolidation of Peri-Peri Charcoal Chicken within the company in June and the 29 new stores it opened nationwide.

Same-store sales growth (SSSG), which filter out the impact of store additions, grew 5% to P5 billion during the period.

“Earnings performance can be attributed to the company’s ongoing store network expansion and improved margins brought about by lower input costs and enhanced operating efficiencies both at the store and corporate level,” the company said in a regulatory filing.

Expenses of SPAVI increased 4.3% to P2.74 billion in the six-month period from P2.63 billion a year ago.

“We are pleased to see sales pick up and SSSG revert to positive territory in the second quarter. We look forward to increasing contributions from new stores, with the opening of at least 15 more outlets in the Philippines during the second half of 2019,” SPAVI President and Chief Executive Officer Vicente P. Gregorio said in a statement.

He noted, however, that the company may not hit its goal of 3-5% SSSG at the end of the year because of increased competition in the restaurant market.

He said the company hopes to keep its earnings up, maintaining its target of double-digit growth in recurring net profit by year’s end, through the company’s “efficiency-enhancing and cost reduction initiatives.”

“Margins in the second quarter already show some of the results from these measures, and we will continue to intensify our efforts in this area,” Mr. Gregorio said.

“We will continue to invest in our brand and our people to better take advantage of the existing opportunity. We will also maintain our store expansion strategy, which now includes both Shakey’s and Peri-Peri, local and international as well,” he added. — Denise A. Valdez

Peso rises on BSP rate cut

THE peso strengthened on Friday, returning to its P51-a-dollar level on the back of the expected 25-basis-point policy rate cut by the central bank on Thursday despite weaker-than-expected economic growth in the second quarter.

The peso gained 16 centavos to close at P51.88 against the greenback.

“The local currency appreciated significantly after the central bank delivered a 25-basis point policy rate cut as expected,” a trader said in an email.

The interest rate cut came despite some bets for a bigger slash after weaker gross domestic product growth last quarter and looser policy rate adjustments by various central banks overseas, the trader said.

The Bangko Sentral ng Pilipinas’ policy-setting Monetary Board cut the interest rate on its overnight reverse repurchase facility by 25 bps to 4.25% as inflation pressures continued to ease. The rates on the overnight deposit and lending facilities were cut to 3.75% and 4.75% respectively.

The peso opened at P51.96 a dollar, weakened to as much as P51.97 and strengthened to as much as P51.84.

The economy grew by 5.5% in the three months to June, the slowest in four years. This was also below the government’s 6% to 7% growth target for 2019 and the 5.9% median estimate in a BusinessWorld poll of 15 economists last week.

Volume droppedtot $914.71 billion from $1.452 billion a day earlier.

The peso is likely to range from P51.85 to P52.25 a dollar as the trade was between the US and China escalates, another trader said.

US President Donald J. Trump earlier said he wanted to impose an additional 10% tariff on $300 billion of Chinese goods starting Sept. 1.

In retaliation, China’s central bank devalued its currency to 7 yuan per dollar. Trade tensions went to another level when the US accused China of manipulatin its currency. — Beatrice M. Laforga

Krungsri to buy 50% stake in Security Bank Finance

THAILAND’S Bank of Ayudhya (Krungsri) will buy a 50% stake in Security Bank Corp.’s consumer finance unit in a bid to boost its loan portfolio and expand retail offerings, the Philippine lender said in a statement on Friday.

Security Bank said Krungsri or its units will have a 50% stake in Security Bank Finance. The deal will take effect once the transactions are closed and after regulatory approvals. ING Bank N.V. served as the financial advisor on this transaction.

Security Bank shares rose by P1.5 to close at P193.50 each.

“By localizing the strategies that propelled Krungsri to become Thailand’s market leader in consumer finance, SBF is well positioned to scale the business faster, launch better and more innovative product variants, serve more customers and, in effect, substantially grow its market share in retail business,” Security Bank President and Chief Executive Officer Sanjiv Vohra said in the statement.

The integration will also allow Security Bank Finance to adopt new risk management models and make operations more efficient.

The two banks said they planned to explore opportunities in personal and motorcycle loans and insurance.

Krungsri is the fifth largest financial group in Thailand in terms of assets, loans and deposits.

Security Bank, which posted total assets of P763 billion as of March 31, is among the six largest private local universal banks in the Philippines. — Beatrice M. Laforga

PNB H1 profit dips on one-time gain

PHILIPPINE National Bank’s (PNB) earnings fell to P3.9 billion in the six months to June from P5.4 billion a year earlier, which included a one-time gain from the sale of foreclosed assets, the lender said in a statement on Friday.

Assets of PNB and its units grew 24% to P1.09 trillion. PNB shares fell by 20 centavos to close at P49.50 each.

PNB didn’t provide second-quarter financial figures.

The bank’s net interest income rose 13% to P14.7 billion, while loans and receivables increased by the same rate to P594.1 billion, according to the statement. — Beatrice M. Laforga

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