PSBank net profit climbs in first half

August 9, 2018 | 3:41 pm

Philippine Savings Bank (PSBank) reported higher net income in the the first half of the year on the back of strong net interest income and service fees.
In a disclosure to the local bourse on Thursday, Aug. 9, the consumer lending arm of Metropolitan Bank & Trust Co. (Metrobank) saw its net profit climb to P1.35 billion in the January-June period, up 14.7% from P1.18 billion in the same period last year.
PSBank attributed this to its “robust revenues driven by net interest income and service fees.”
The bank’s net interest income grew 8.8% to P5.85 billion from last year’s P5.38 billion.
Total loan portfolio expanded by 10.7% to P151.62 billion from the P137.01 billion tallied year-on-year.
Deposits likewise stood at P200.09 billion, 9% higher from a year-ago period.
PSBank’s earnings translated to a return on equity of 11.83%.
Common equity tier 1 ratio stood at 11%, which capital adequacy ration was at 13.7%, above the minimum central bank requirement levels.
Overall, the bank’s total assets stood at P234.76 billion, up 7.4% from the same period last year.
In the statement, PSBank President Jose Vicente L. Alde said the lender’s first half performance is a realization of its institutional strategy by providing end-to-end customer experience.
“We have likewise tapped on the latest available digital technology to improve on process efficiencies to bring the cost of operations down while maximizing the full potential of our sales distribution channels in generating more business for the bank,” Mr. Alde was quoted as saying in the regulatory filing. — Karl Angelo N. Vidal

PHL GDP eases to 6%, below gov’t target band and estimates

August 9, 2018 | 11:19 am

By Carmina Angelica V. Olano, Researcher
The Philippine economy grew 6.0% in the second quarter of 2018, the Philippine Statistics Authority (PSA) reported Thursday morning.
The April-June gross domestic product (GDP) growth figure was lower than the revised 6.6% growth recorded in the same period in 2017 and the 6.8% median estimate in a BusinessWorld poll last week.
This brings growth in the first half to 6.3%, which is also below the government’s 7-8% target band for 2018.
The services led growth among major sectors at 6.6%, faster than the 6.4% recorded in the same period last year. Meanwhile, the industry sector posted a 6.3% growth, slower than the 7.1% in 2017.
Agriculture also grew albeit marginally at 0.2% versus the 6.3% growth posted a year ago.
On the expenditure side, household spending was up 5.6% during the period compared to the 6.0% growth in the second quarter of 2017.
Exports of goods and services grew by 13.0%, slower than 2017’s 21.4%. Meanwhile, imports grew 19.7% from 18.6%.
On the other hand, government spending picked up steam during the quarter, growing by 11.9% from 7.6% in the same period last year. Capital formation, which is a measure of private investment, was likewise up by 20.7% from 7.6%.
Gross national income—the sum of the nation’s GDP and net income received from overseas—recorded a growth of 5.8% in the second quarter of 2018, down from 6.6% previously.

Gov’t raises $1.39B from yen debt sale

August 9, 2018 | 12:34 am

THE PHILIPPINES raised a total of ¥154.2 billion, or about $1.39 billion, as it returned to the “samurai” bond market after eight years, the Department of Finance (DoF) said in a statement on Wednesday.
The department said the government raised ¥107.2 billion in three-year papers with a 0.38% coupon, ¥6.2 billion in five-year debt that fetched 0.54% and ¥40.8 billion in 10-year notes that fetched 0.99%.
“Overall, the transaction yielded a weighted average spread of 34.7 bps above benchmark. Compared to our peers, the Republic priced tighter and issued more than Indonesia (¥100 billion) and higher-rated Mexico (¥135 billion),” Finance Secretary Carlos G. Dominguez III told reporters in a mobile phone message.
He said that the dollar equivalent of the transaction size is $1.39 billion, slightly more than the $1 billion initially planned.
National Treasurer Rosalia V. De Leon said in a mobile phone message that the sale involved “all new money.”
“The Republic has a track record of very tight pricing in US Dollar markets and we will be uncompromising in measuring against that benchmark in approaching new markets,” Ms. De Leon said in a DoF statement.
“Pricing on today’s offering is very compelling and we were able to print the maximum deal size we were seeking.”
‘DEEPENING CONFIDENCE’
The same statement quoted Mr. Dominguez as saying: “This successful return to the ‘samurai’ bond market is the latest proof of the deepening investor confidence in the Philippine economy under the Duterte presidency.”
“The government’s disciplined fiscal position, along with game-changing reforms starting with the new legislation — the Tax Reform for Acceleration and Inclusion Law — that has modernized and simplified Philippine taxation, have created enough room for our current policy of aggressive investments not only in public infrastructure but in human capital formation as well,” he added.
“Such priority programs are meant to sustain the country’s momentum as one of Asia’s fastest-growing economies, further improve its global competitiveness and bring lasting social benefits to all Filipinos in keeping with President (Rodrigo R.) Duterte’s vision for high growth and financial inclusion,” said Mr. Dominguez.
The sale of yen-denominated bonds followed the Philippine economic briefing in Tokyo conducted by the government’s economic managers and other cabinet members in June, attended by about 500 investors.
The DoF said that Daiwa Securities Company Ltd., Mitsubishi UFJ Morgan Stanley Securities Co. Ltd., Mizuho Securities Co. Ltd., Nomura Securities Co. Ltd. and SMBC Nikko Securities, Inc. were the joint lead managers and book runners for the bond sale.
The bonds were rated investment grade at “Baa2” by Moody’s Investor Service, “BBB” by S&P Global Ratings, and “BBB+” by Japan Credit Rating Agency, Ltd.
“Today’s offering was well received by a good mix of institutional and regional investors — most of whom are new to Philippine credit. These included [asset managers, life insurers, trust banks and specialist banks, regional accounts including shinkin banks, non-Japanese accounts and corporates],” DoF said in its statement.
The Philippines last went to the “samurai” bond market in 2010, raising ¥100 billion in 10-year notes that fetched a 2.32% coupon.
“Today’s offering marks the return of the Republic to the Samurai market after an eight-year break, and the first time in almost 20 years that it has issued ‘samurai’ bonds on a stand-alone basis,” the DoF said.
“This year has been a trailblazing year for the Republic in the international capital markets. In March we issued our debut ‘panda’ bonds to tremendous investor endorsement. And with today’s ‘samurai’ offering, we continue to expand and diversify our market access,” Ms. De Leon said.
‘INCREASING INTEREST’
Mr. Dominguez meanwhile said that the Philippines’ recent successful exposure in the capital markets in Japan and China “underscores the international business community’s increasing interest in investing in the Philippine growth story.”
The government sold $230 million worth of renminbi-denominated “panda” debt in March with a five percent coupon, reflecting a tight 35 basis point spread above the benchmark rate.
It also raised $2 billion in its dollar global bond sale in January, with half consisting of new money and the other $1 billion in a debt swap for liability management.
The DoF has said that was looking the possibility of another global bond sale some time this semester.
The government plans to borrow P888.23 billion this year.
It has increased the share of foreign borrowings for this year to a 65-35 borrowing mix in favor of local sources, from a 74-26 ratio planned earlier and 80-20 programmed for 2017, in a bid to diversify its financing portfolio. — Elijah Joseph C. Tubayan

PSA revises Q1 economic growth rate downwards

August 9, 2018 | 12:33 am

THE ECONOMY grew slower than previously estimated in the first quarter, the government reported ahead of the release of second-quarter gross domestic product (GDP) data today.
The Philippine Statistics Authority (PSA) said its latest estimate shows that first-quarter GDP — which measures the value of final goods and services produced in a country — went up by 6.6%, lower than the 6.8% that was reported last May.
Four subsectors that recorded notable downward adjustments were: “other services” (revised to 6.9% from 8.8%), construction (8.8% from 9.3%), manufacturing (7.6% from 8%), and agriculture and forestry (1.9% from 2.4%).
A BusinessWorld poll of 15 economists and analysts yielded a median estimate of 6.8% for the April-June period. If realized, this figure would take first-semester average growth to 6.8%, a few points shy of reaching the 7-8% government target for full-year 2018. Some economic managers last month aired hopes for second-quarter GDP growth of seven percent. — M. T. Amoguis

Philippines’ FX reserves slip in July

August 9, 2018 | 12:32 am

THE COUNTRY’s foreign exchange reserves dipped to a fresh six-year low in July as the Bangko Sentral ng Pilipinas (BSP) tapped the pool of funds to defend the local currency.
Gross international reserves (GIR) dropped for the fourth straight month to $76.892 billion from June’s $77.525 billion and from $81.065 billion a year ago.
This is the lowest reserve level seen since June 2012’s $76.13 billion.
GIR decline persisted as the government paid its outstanding foreign debts, coupled with downward adjustments in international gold prices, the BSP said in a statement sent late on Tuesday.
The value of the BSP’s gold holdings slipped to $7.788 billion last month from $7.913 billion in June and from $8.003 billion a year ago.
The central bank also used the reserves to temper sharp exchange rate swings at a time the peso kept trading weaker than P53 to the dollar. The local currency averaged P53.4329 against the greenback in July, marking a fresh 12-year low.
As a result, income from foreign investments dropped to $60.831 billion in July from $62.356 billion the preceding month.
On the other hand, the value of the BSP’s foreign currency holdings went up to $6.59 billion from $5.573 billion in June, as the result of a weaker peso. Bigger net foreign currency deposits plus a steady stream of income from the BSP’s offshore investments partly offset the outflows, the central bank said.
Meanwhile, reserves parked with the International Monetary Fund (IMF) inched lower to $488.5 million from $489.3 million previously, while the Philippines’ special drawing rights — the amount that can be tapped in the IMF’s reserve currency basket — steadied at $1.195 billion.
The current GIR level settled below the $80-billion forecast by the central bank for the entire 2018 and is lower than the $81.57-billion reserves held at end-2017.
July reserves can cover 7.4 months’ worth of imports, providing an “adequate” buffer for the economy at a time of heavy importation of raw materials and capital goods as the economy expands. The import cover ratio is well above the three-month global standard.
They were also equivalent to 6.1 times the country’s short-term external debt of up to one year and 4.1 times based on “residual maturity”, or outstanding external debt with original maturity of up to a year, plus principal payments on medium- and long-term loans of the public and private sectors falling due in the next 12 months.
In a speech before the Senate Committee on Finance on Tuesday, BSP Governor Nestor A. Espenilla, Jr. said the country’s GIR remains “sufficient to help shield the economy and financial markets against global market volatilities.”
Fitch Ratings also cited the ample reserves as a source of optimism for the Philippines’ credit score, which it kept at “BBB” with a “stable” outlook last month. — Melissa Luz T. Lopez

Philippine trade year-on-year performance (June 2018)

August 9, 2018 | 12:31 am

EXTERNAL TRADE in goods likely dragged economic growth in the second quarter as sales abroad of locally made products dipped in June while imports continue to grow, based on data released by the government yesterday. Read the full story.

Trade gap persists, though smaller, as June imports surge, exports dip

August 9, 2018 | 12:31 am

EXTERNAL TRADE in goods likely dragged economic growth in the second quarter as sales abroad of locally made products dipped in June while imports continue to grow, based on data released by the government yesterday.
Sales abroad of Philippine-made goods were roughly flat in June, posting a 0.1% contraction to $5.7 billion. While the reading was a reversal from June 2017’s 17.1% growth, it was the smallest decline recorded so far this year and was better than May’s 1.8% contraction.

The latest merchandise export figure brought year-to-date receipts to $32.732 billion, down 3.8% from $34.035 billion in the same six months last year.
At the same time, imports increased 24.2% to $9.050 billion in June, faster than the 12.6% recorded in May and 0.6% in June 2017. Year-to-date, imports rose by 13.2% to $51.837 billion from $45.785 billion a year ago.
The country’s balance of trade in goods registered a $3.350-billion deficit in June, smaller than May’s $3.69 billion but bigger than the $1.586-billion shortfall recorded in June 2017.
The trade deficit widened to $19.105 billion year to date from the $11.749-billion gap recorded in 2017’s comparable six months.
For the second quarter alone, the deficit was $10.520 billion this year versus $5.647 billion in 2017 and $8.585 billion in the first quarter of this year.
By commodity group, exports of manufactured goods — which accounted for 85% of the total overseas sales — grew by 3.2% to $4.853 billion. Exports of electronic products grew 13.5% to $3.352 billion. Exports of mineral products fell by 37.5% to $257.740 million, while shipments of agro-based products were down by 4.9% to $420.177 million.
For imports, mineral fuels, lubricant and related materials grew by 32.5% to $1.053 billion. Imports of capital goods, raw materials and intermediate goods, as well as consumer goods grew 30.1% (to $3.062 billion), 21% (to $3.382 billion), and 15.6% (to $1.517 billion), respectively.
Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines (UnionBank), said that import figure for the month can be attributed to “the push for more infrastructure development in the country and increasing investments, both public and private.”
Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines (LANDBANK), was of the same opinion: “Imports surged in June, as the country’s upbeat investment climate fuelled the importation of capital and intermediate goods,” he said.
As for flat growth in exports, the economists noted the sluggish external demand for some of the country’s key commodities. They said, however, that the weakness of the peso helped somewhat in the improvement of exports.
For LANDBANK’s Mr. Dumalagan, the widening trade deficit might pose a drag to the country’s second-quarter economic performance albeit smaller compared to the previous quarter.
“A negative balance of trade subtracts some points from economic growth. Compared with the first quarter, however, the deduction from net trade might be lower in the second quarter amid some improvement in exports,” Mr. Dumalagan said.
“The balance of trade may remain in deficit for the rest of the year driven by higher inbound shipments of capital goods, which are needed for the government’s ‘Build, Build, Build’ program.”
For UnionBank’s Mr. Asuncion: “This 2018, exports are expected to continue with recovery although slowly; while imports are still expected to outpace exports due to strong demand for public and private investments.”
Mr. Asuncion noted that even with the expanding trade deficit, the country’s macroeconomic fundamentals seem to be intact.
“[A] lot of observers are also saying that there are emerging risks and the widening trade deficit is one of them,” he said.
“For me, this is still a net positive for the country because the data also shows that Philippine trade is still growing steadily even amid the global threat of trade wars.”
In a statement, the National Economic and Development Authority (NEDA) said that the promotion and development of the country’s exports “should be more aggressive” in helping sustain the country’s trade performance as was recorded in June.
Total trade, which is the sum of exports and imports, posted $14.751 billion for the month, up 13.5% year on year.
“Creating a broader market base for exports through effective trade facilitation and by effectively utilizing existing free trade agreements, as well as forging new ones, are important in improving our export market moving forward,” NEDA quoted its director-general, Socioeconomic Planning Secretary Ernesto M. Pernia, as saying.
“We should also negotiate for lower tariffs with other trade partners. In the case of bananas for instance, the reduction in tariffs will enable the country to compete with other banana exporters.”
Hong Kong is the Philippines’ top export market in June with a 15.8% market share at $901.201 million followed by the United States’ 15.5% ($884.654 million) and Japan’s 13.9% ($793.688 million) market shares.
Meanwhile, China was the country’s top source of imports with a 21.4% share in June ($1.935 billion) followed by the 9.8% and 9.7% market shares of South Korea ($886.311 million) and Japan ($880.996 million), respectively. — Christine Joyce S. Castañeda

Philippine agriculture performance (Q2 2018)

August 9, 2018 | 12:30 am

FARM OUTPUT barely grew last quarter as a drop in crops and fisheries offset increases in livestock and poultry, the Philippine Statistics Authority (PSA) reported on Wednesday, prompting economists to say that overall economic expansion in the same three months — to be reported hours ahead of today’s monetary policy meeting that is expected to yield the year’s third consecutive interest rate hike after the PSA reported a fresh five-year-high 5.7% inflation rate on Tuesday — could not look to the sector for any boost. Read the full story.

No GDP boost from flat second-quarter agriculture output

August 9, 2018 | 12:30 am

FARM OUTPUT barely grew last quarter as a drop in crops and fisheries offset increases in livestock and poultry, the Philippine Statistics Authority (PSA) reported on Wednesday, prompting economists to say that overall economic expansion in the same three months — to be reported hours ahead of today’s monetary policy meeting that is expected to yield the year’s third consecutive interest rate hike after the PSA reported a fresh five-year-high 5.7% inflation rate on Tuesday — could not look to the sector for any boost.
The PSA reported that agricultural output grew in value terms by a nearly flat 0.07% annually last quarter, compared to the upward-revised year-ago 6.22% and the first quarter’s 1.47%.
The latest data brought first-half growth of farm output — which contributes nearly a tenth to gross domestic product (GDP) — to just 0.58% against a 2.5-3.5% annual target for the sector under the 2017-2022 Philippine Development Plan.
“Overall, the outlook for recovery is a major challenge,” Rolando T. Dy, executive director of the University of Asia and the Pacific’s Center for Food and Agribusiness, said in an e-mail when sought for comment.
“Given 0.6% growth in the first half, to grow by two percent in 2018, the second half must post three percent growth.”
Saying that the second quarter’s “modest growth” that was “almost flat” due “to the higher base/denominator a year ago… would have a small contribution to 2Q 2018 GDP growth rate,” Michael L. Ricafort, head of Rizal Commercial Banking Corp.’s Economic and Industry Research Division, said in a separate e-mail that “growth of agriculture production for 3Q 2018 and for the rest of 2018 would start to pick up due to lower base/denominator in 2H 2018.”
At the same time, he said damage from floods “since the early part of 3Q 2018 could somewhat… slow down agriculture production growth”, while “higher inflation that raised the cost of fuel/petroleum, transportation and other inputs could also be a drag to further growth in agriculture production.”
Noting that “weather disturbances, pest attacks and advance harvesting” weighed on crop production last quarter, Land Bank of the Philippines market economist Guian Angelo S. Dumalagan said in a mobile phone message that “[n]ext quarter, we might still be seeing weak data from the crops subsector due to the recent typhoons that hit the country.”
“This drop in crop output may contribute to a decline in agricultural production in the third quarter.”
SUBSECTORS
Production of the crops subsector — which accounted for 49.65% of total value of agricultural output — fell by 2.08%, causing a 0.44% reduction last semester.
Palay production, which accounted for 17.27% of overall farm production value, dropped 1.44% as volume fell to 4.09 million metric tons (MMT) from 4.15 MMT due to a decrease in area harvested in Cagayan Valley as farmers opted to harvest in the latter part of the preceding three months “to avail of the good price offered by traders”, a shift to cassava and sugarcane, as well as early harvest in the South Cotabato-Cotabato-Sultan Kudarat-Sarangani-General Santos City (SOCCSKSARGEN) region in Minanao “because of hot weather conditions”.
Production of this staple edged up 1.68% to 8,713 MMT last semester from 8.569 MMT in 2017’s first half, which saw a 12.06% growth.
Production of corn — another staple that made up 17.27% of total output value — fell by 3.42% in volume terms to 1.284 MMT from 1.33 MMT also due to a decrease in area harvested in Cagayan Valley due to early harvesting and in SOCCSKSARGEN “due to insufficient rains” the preceding three months.
Production of this grain edged up by 1.75% to 3.761 MMT last semester from 3.696 MMT in 2017’s first half, which recorded a 30.7% surge.
Fisheries, which contributed 16.85% to total farm output value, slipped by 0.05% on smaller production of milkfish, tiger prawn, round scad and yellowfin tuna while tilapia, skipjack and seaweed increased, making first-half production drop 2.14%.
On the other hand, poultry — which accounted for 16.83% of total farm output — grew by 5.14% last quarter as most of the subsector’s segments, except duck, increased, fueling a 5.19% expansion last semester.
Similarly, livestock — which made up 16.67% — grew 1.88%, partly as hog production increased by 2.81, driving first-half production to increase by 1.95%.
Farmers got a better deal for their products overall, as farmgate prices rose by 5.48% — driven by increases of 6.27%, 7.83% and 6.75% for crops, livestock and fisheries, respectively, that offset a 0.25% decline for poultry — fueling a 6.39% hike last semester. — with inputs from C. A. V. Olano and A. G. A. Mogato

EDC delisting from PHL stock exchange

August 9, 2018 | 12:12 am

By Victor V. Saulon, Sub-editor
ENERGY Development Corp. (EDC) said its board of directors had approved on Wednesday the voluntary delisting of the Lopez-led company’s common shares from the main board of the Philippine Stock Exchange (PSE).
In a disclosure to the exchange, the renewable energy company said it would conduct a tender offer for up to 2,040,006,713 common shares at P7.25 each that are held collectively by the public.
“The intention to eventually delist EDC was shared with the market last year and the tender offer that our board has approved today presents a meaningful opportunity for our minority shareholders to realize their investment prior to the delisting of the company, at a significant premium to the current share price,” EDC President and Chief Operating Officer Richard B. Tantoco stated.
EDC, along with its parent firm First Gen Corp., sought a suspension of trading of its shares because of the delisting decision. Its shares were last traded at P4.95 each.
The company said the tender offer price is “subject to certain terms and conditions as now or hereafter set forth” by the company. Excluded from the tender offer are shares held by Red Vulcan Holdings Corp., First Gen Corp., Northern Terracotta Power Corp., and Philippine Renewable Energy Holdings Corp. (PREHC).
The tender offer price represents a 46% premium over the closing share price on Aug. 7, and a 40% premium over the three-month volume weighted average price of P5.18.
EDC said independent financial adviser KPMG issued an opinion based on an independent valuation that the tender offer price is fair and reasonable from a financial point of view.
Subject to the filing by EDC of the tender offer report with the Securities and Exchange Commission (SEC), the offering period is expected to run from Sept. 25 to Oct. 22, 2018.
It is subject to a minimum of 1,162,000,000 common shares being tendered and eligible for acceptance by EDC, which will reduce the percentage of shares held by the public from 10.9% to less than 5%. The reduction will allow a voluntary delisting of the company, subject to PSE approval on the threshold condition.
With the SEC’s approval, EDC may extend the tender offer period and may, at its discretion, waive the threshold condition.
The tender offer follows the completion in September 2017 of PREHC voluntary tender offer to acquire 8.9 billion common shares of EDC.
EDC said at that time, PREHC and First Gen had communicated to the market their intentions to eventually delist the unit, to pursue a corporate strategy that would require greater flexibility over factors like its dividend policy and leverage, and to support long-term growth.
EDC is the country’s largest renewable energy producer, delivering 1,472 megawatts (MW) from hydro, solar, and wind power apart from geothermal.
The company’s 150-MW Burgos wind farm is the biggest in the country. Its nearly 1,200-MW geothermal capacity accounts for 61% of the country’s total installed geothermal capacity.
Parent firm First Gen has a portfolio of 3,490 MW, which accounts for 21% of the country’s gross generation capacity.
PREHC is a consortium of investors comprised of funds managed by Macquarie Infrastructure and Real Assets, and Arran Investment Pte Ltd., an affiliate of GIC Pte Ltd.

Converge ICT will invest $1.8B to accelerate broadband rollout

August 9, 2018 | 12:11 am

CONVERGE ICT Solutions, Inc. is investing $1.8 billion for its broadband network expansion in the next five years, partnering with US, South Korean and Philippine companies for its nationwide rollout.
The fiber internet provider on Wednesday signed a contract with South Korea’s KT Corp., US-based Tyco Electronics Subsea Communications LLC (TE SubCom) and local firm Fibernet Konstrukt Corp. for its fiber optic cable (FOC) construction project.
“The total investment in five years is $1.8 billion. Financing is by equity and by bank,” Converge ICT Chief Executive Officer Dennis Anthony H. Uy told reporters on Wednesday.
Mr. Uy said the company sought the expertise of these three companies to build and deploy infrastructure for its network.
“Because they are number 1 technology in the world,… so we bring them here in the Philippines to assist us in the rollout and (to) construct faster… In terms of the best practices, in terms of best experience, you need that from other countries,” he said.
Miles Tonn Chua, chief operating officer of Converge ICT unit MetroWorks ICT Construction, Inc., was quoted as saying in a statement that the network rollout has the potential to reach more than 13 million households, especially in Visayas and Mindanao.
Mr. Chua noted the entire network backbone is targeted to be completed by 2021, but may be operational in phases to allow Converge ICT to provide “pure end-to-end fiber” internet connectivity throughout the country.
Mr. Uy said the company is targeting to reach seven-million subscribers in five years.
Meanwhile, Converge ICT is not interested in joining the government’s bid for the ”third telco player” as it is focused on its fixed broadband business.
“We, Converge, (will) build the whole nationwide network to whoever wants to play in the mobile space. We allow them to use our backbone being built…. And we kickoff immediately to roll out to public faster,” Mr. Uy said. — D.A. Valdez

SMFB plans to conduct follow-on offering

August 9, 2018 | 12:10 am

By Arra B. Francia, Reporter
SAN MIGUEL Food and Beverage, Inc. (SMFB) is planning a follow-on offering in a bid to comply with the minimum public ownership rule, after the consolidation of parent San Miguel Corp.’s (SMC) food and beverage units brought down its public float to around four percent.
In a disclosure to the stock exchange on Wednesday, SMFB said its board of directors has approved the offering of 1.2 billion shares owned by SMC, equivalent to around 20% of the company’s outstanding common shares.
Based on SMFB’s closing share price on Wednesday, the offering will allow the company to raise as much as P87.4 billion.
However, it noted the issue price will depend on the terms determined by the management and as agreed upon with SMC.
The listed firm’s board has likewise approved the submission of a registration statement and prospectus for the offer to the Securities and Exchange Commission.
SMC President Ramon S. Ang earlier said the planned share sale would happen in February this year, with the initial size pegged at around $3 billion from the sale of 30% of SMFB’s shareholdings. The company however delayed the issuance due to volatility in the market, pushing it back instead to the fourth quarter.
EARNINGS UP
In a separate statement, SMFB said its earnings jumped by a fifth to P15.4 billion in the first six months of 2018, boosted by the double-digit growth across its portfolio. Consolidated revenues went up 15% to P137.4 billion.
The comparative figures were derived from the consolidated financials of San Miguel Brewery, Inc. (SMB), Ginebra San Miguel, Inc., and San Miguel Pure Foods Company, Inc., following the completion of the businesses’ consolidation last June 29.
The food group generated P62.9 billion in consolidated revenues, 12% higher in the same period a year ago due to the performance of the feeds, poultry and meats, and branded value-added units. Operating income accordingly went up by six percent to P4.7 billion.
SMB benefited from the higher consumption of beer products nationwide, expanding its consolidated revenues by 18% to P62.5 billion for the first semester. The unit delivered P17.3 billion in operating income, 23% higher year-on-year.
Meanwhile, GSMI’s operating income surged by 57% to P862 million during the period, thanks to core brands Ginebra San Miguel and Vino Kulafu. Revenues advanced by 19% to P12 billion.