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From dump to desk: upcycling pineapple waste into specialty paper

The Design Center of the Philippines, an attached agency to the Department of Trade and Industry committed to strengthening the Philippines’ design ecosystem, recently launched pinyapel, a locally-processed and locally-manufactured specialty paper from locally-sourced discarded pineapple leaves.

“Design Center’s pinyapel is a welcome development in our country’s materials library,” says Maria Rita O. Matute, executive director of Design Center. “Aside from indigenous raw materials, material choices now include processed agricultural waste, such as pineapple leaves, developed into high value materials.”

“Exploring different materials and experimenting with the strength, assets, and potential of those material, we at Design Center intend to produce uniquely Filipino yet globally relevant material solutions that can improve our country’s competitiveness in the global market,” Matute adds, underlining the role of materials as building blocks of design.

Design Center has a materials research and development program that is committed to producing sustainable, cost-effective and commercially-viable new materials that can enhance Philippine products and services, and contribute in bolstering local businesses.

Locally-sourced, locally-manufactured paper

As the second largest producer of pineapple products globally, the Philippines produces millions of metric tons of pineapple every year. In year 2017 alone, the Philippine Statistics Authority’s Selected Statistics on agriculture reports that pineapple production figures amount to 2.671M, with around five percent of that comprised of agricultural wastes such as pineapple leaves (Food and Fertilizer Technology Center).

Through the rigorous materials research and development efforts of Design Center, an IP-protected process was developed, yielding a new specialty paper using pineapple leaves, reinforced and print viable for secondary packaging applications.

Pinyapel offers a solution for agricultural wastes by giving them new purpose and value. In this case, discarded pineapple leaves from pineapple plantations, and increasing livelihood for their farmers.

Nature’s Fresh Pineapples, who supplied the discarded pineapple leaves for the experimentation and prototyping phases of pinyapel, says that aside from the diversified use of pineapple leaves from their farms, the initiative also became a tool to increase livelihood of their farmers. “For every one cycle of drying, collecting, and bagging of five tons of pineapple leaves, it adds an approximately Php 1,753 to the weekly income of every seven pineapple laborers,” said Aleli Mae Uy, chief operating officer of Nature’s Fresh Pineapples.

Pinyapel also leverages the country’s agricultural industries to align with the UN Sustainable Development Goal of responsible production and consumption. Especially with the increasing awareness on sustainability going around locally and globally, Design Center’s pinyapel initiative offers to spark more ideas in transforming local raw materials, agricultural and industrial wastes to high-value materials that can be used in new product development and innovative designs.

Lolita Cabanlet, general manager of CDO Handmade Paper, the paper sheet processor that partnered with Design Center in producing pinyapel, is proud that the Philippines is gradually moving towards sustainable and ecologically-conscientious manufacturing and production through the pinyapel initiative.

“The development of pineapple paper by the Design Center of the Philippines came at its right time when people are searching for biodegradable and sustainable materials. It is best for packaging items such as bags, boxes, pouches, envelopes and many more. Aside from the local market, there is a huge demand for a food-safe pineapple paper itself from other countries, thus, export opportunity for it is bountiful,” she said.

Creating new markets

The initiative seeks to involve raw materials suppliers, material converters, and manufacturers nationwide to encourage a circular economy that unlocks commercialization opportunities using the newly developed specialty paper.

For Ideatechs Packaging, a partner for the beta run of the pinyapel production, the opportunity to collaborate with Design Center expanded material options as they were able to use pinyapel in gift bags and paper cup sleeves. “We at Ideatechs find it fulfilling that this collaboration has allowed us to support sustainability through the upcycling of waste pineapple leaves, and the local pineapple industry, especially those in the SME sector,” said Helen Lising, general manager of Ideatechs.

Further research and development initiatives are underway to develop a high value material for more product applications. Design Center is open to more interested converters and manufacturers willing to adopt the pinyapel formulation and process, and collaborate to further explore pinyapel for a more expansive commercialization.

First quarter economic growth slowest in 4 years

The Philippine economy posted a 5.6% gross domestic product (GDP) growth in the first quarter, the Philippine Statistics Authority (PSA) reported this morning.

The first quarter outcome was lower than the 6.3% in the previous quarter and 6.5% in the first quarter of 2018.

This was the slowest expansion in four years or since the 5.1% logged in the first quarter of 2015. This also snapped the economy’s sixteen-quarter growth streak of at least 6% growth.

This was likewise lower than the 6.1% median estimate in a BusinessWorld poll of 20 economists conducted last week as well as missing the downward revised 6%-7% target set by the government for 2019.

On the supply side, services led the way with a 7% expansion, faster than the 6.7% recorded in the same period last year.

Meanwhile, the industry sector grew by 4.4%, slower than last year’s 7.7%. Growth in agriculture, hunting, forestry and fishing likewise slowed to 0.8% versus the 1.1% in the same quarter last year.

On the demand side, government spending recorded a 7.4% growth albeit slower than the 13.6% growth in the first quarter of 2018.

Private investment, which is represented in the data as capital formation, slowed down during the quarter at 6.8% compared to 10.3% previously.

Growth in the exports and imports of goods and services also eased to 5.8% and 8.3%, respectively, from 10.3% and 11.3%.

On the other hand, household spending recorded a 6.3% growth, accelerating from 5.3% in the fourth quarter of 2018 and 5.6% in the first quarter of 2018.

Gross national income – the sum of the nation’s GDP and net income received from overseas – posted a 4.9% growth in the first three months of 2019 compared to 5.7% the previous quarter and 6.3% in the 2018’s comparable three months. — Marissa Mae M. Ramos

Exports fall a 4th month, widen trade gap

By Christine Joyce S. Castañeda
Senior Researcher

MERCHANDISE TRADE remained a drag on overall economic growth last quarter, as export receipts declined for the fourth straight month in March while import payments continued to increase.

Preliminary data released by the Philippine Statistics Authority (PSA) said merchandise exports declined by 2.5% year-on-year by the end of the first quarter. This resulted in sales of $5.876 billion in March from $5.222 billion in February and $6.024 billion in March 2018.

Philippine trade year-on-year performance (March 2019)

This marked the fourth straight month of export decline following contractions in February (-0.1%), January (-6.7%) and December 2018 (-12.2%).

At the same time, import payments rose 7.8% to $9.014 billion in March, accelerating from the upticks of 2.6% in February and 3.6% in January.

To date, payments for the import of goods grew by 4.7% to $26.179 billion on a cumulative basis against the nine percent goal of the interagency Development Budget Coordination Committee (DBCC) for full-year 2019.

March results brought year-to-date export receipts to $16.377 billion, a 3.1% decrease from the $16.906 billion in the first quarter of 2018 and below the DBCC’s six percent growth assumption for this year.

Consequently, the country’s balance of trade in goods in March registered a deficit of $3.138 billion, widening from the $2.744 billion in February and $2.340 billion in March 2018.

On a cumulative basis, the trade deficit widened to $9.801 billion in the first quarter, larger than the $8.103-billion shortfall in the first three months of 2018.

In a statement, the National Economic and Development Authority (NEDA) attributed the decline in merchandise exports to the decrease in sales of electronics and petroleum products.

ELECTRONICS DEMAND WEAKENS
Electronic products — which accounted for more than half of export earnings — declined by 3.7% to $3.231 billion from $3.354 billion recorded in the same period of 2018.

Year-to-date, overseas sales of electronic products slipped by 1.7% to $8.841 billion.

Outbound shipments of manufactured goods, which accounted for 82.5% of total exports, went down 3.8% to $4.848 billion from $5.037 billion in March 2018.

Petroleum products — with a 0.3% share — likewise decreased by 66.9% year on year to $17.109 million.

On the other hand, exports of agro-based products grew by 5.4% to $436.418 million. Exports of forest and mineral products likewise grew by 24% to $30.813 million and 8.1% to $407.792 million, respectively.

On the import side, purchases of consumer goods posted the highest growth at 21.4% to $1.485 billion.

This was followed by imports of capital goods, which registered a 13.2% growth in March to $2.894 billion. Imports of raw materials and intermediate goods also increased by 5.5% to $3.471 billion.

Bucking the trend was the import of mineral fuels, lubricant and related materials which saw a decline of 12.6% to $1.091 billion.

Union Bank of the Philippines, Inc. (UnionBank) chief economist Ruben Carlo O. Asuncion attributed the “expected” weak export performance mainly to “softness in external demand.”

“Regional trade, largely international trade has been expected to be weak this year due to uncertainties in world trade prospects brought by the trade negotiation issues between the two biggest economies in the world, namely, the US and China,” Mr. Asuncion explained in an e-mail.

For imports, Mr. Asuncion said that the faster growth “can be rooted from last year’s momentum” due to increased demand for capital goods and equipment as government ramps up infrastructure spending.

In a separate email, Rizal Commercial Banking Corp. (RCBC) economist Michael L. Ricafort blamed the trade results to low external demand brought by the slowdown in global economic growth due to the simmering US-China trade war and “Brexit-related uncertainties.”

The wider trade deficit may have affected first-quarter gross domestic product (GDP) results that will be reported by the PSA today.

“Wider trade deficits or net imports could still somewhat be a drag on economic growth,” RCBC’s Mr. Ricafort said.

For his part, UnionBank’s Mr. Asuncion said that while trade continues to be a drag on economic growth, it would be offset by the recovery in household demand amid inflation’s continued slowdown from a nine-year-high 6.7% in September and October last year.

“A slight uptick in the biggest chunk of the economy would be significant enough to offset a decline, particularly, a trade balance drag,” Mr. Asuncion explained, referring to household spending that fuels nearly 70% of GDP.

For Mr. Asuncion, export performance is “expected to continue its softness” unless “overall global trade prospects become more positive.”

“On the other hand, imports may continue to grow as the… government continues with its ambitious infrastructure development program,” he added.

The government is encouraging exporters to diversify their products in order to expand their market reach, NEDA quoted its director-general, Socioeconomic Planning Secretary Ernesto M. Pernia, as saying in a statement.

“To match this effort, the government continues to explore non-traditional markets such as Eastern European countries and is seeking to strengthen ties with traditional trading partners,” Mr. Pernia said, adding that the Export Marketing Bureau of the Trade department is looking at non-electronics products such as cars, desiccated coconut, coconut oil, and footwear & wearables “as new export growth drivers,” among others.

The United States was the Philippines’ top export market in March with a 15.4% share at $906.33 million, down 3.1%, followed by Japan’s 15.2% ($892.20 million, down 1.2%), Hong Kong’s 14.1% ($829.02 million, down six percent) and China’s 12.5% ($732.15 million, down 2.2%).

The first quarter saw Philippine export sales to the US, which accounted for 16.1% of the total, grow 4.7% to $2.644 billion. Philippine shipments to Japan, which accounted for 15.9%, fell by four percent to $2.612 billion, those to Hong Kong, which accounted for 13%, dropped eight percent to $2.132 billion, while those sold to China, which contributed 12.5%, increased by 2.3% to $2.052 billion.

Meanwhile, China was the Philippines’ top source of imports in March with a 21.4% share ($1.925 billion, up 50.2%) followed by Japan’s 9.8% ($882.87 million, down 3.8%) and the United States’ 7.9% ($712.43 million, up 12.2%).

Year-to-date, imports from China, which accounted for 21.3% of the total, grew 24.9% to $5.579 billion; those from Japan, which made up 9.7%, fell 2.2% to $2.539 billion; while those from the US, which made up 7.3%, slipped 0.6% to $1.907 billion.

Philippine trade year-on-year performance (March 2019)

MERCHANDISE TRADE remained a drag on overall economic growth last quarter, as export receipts declined for the fourth straight month in March while import payments continued to increase. Read the full story.

Philippine trade year-on-year performance (March 2019)

Farm output nearly flat in Q1

By Vincent Mariel P. Galang
Reporter

A NEARLY FLAT farm output marked the first quarter, slowing from a small increment a year ago, the Philippine Statistics Authority (PSA) said on Thursday a day ahead of its gross domestic product (GDP) report for the same period, noting that increases in livestock, poultry and fisheries output narrowly offset a drop in crops that accounted for half of total value of production.

The PSA said that value of production last quarter of the farm sector — which contributes about a tenth to GDP and a fourth of jobs in the country — edged up just 0.67% annually compared to a downward-revised year-ago 1.08% increment and 1.8% in 2018’s final three months, as well as a 2.5-3.5% program under the 2017-2022 Philippine Development Plan.

Value of production of the crops subsector — the biggest contributor to total production with a 52.71% share — decreased by 1.01%, compared to a 1.1% year-ago increment.

Palay, which made the biggest contribution to total farm output value at 18.06%, dropped 4.46% in value and volume (compared to 4.61% growth a year ago) to P4.417 million metric tons (MMT) against an April 15 expectation of a 1.3% drop to 4.56 MMT.

“This was attributed to the adverse effects of the dry spell reported in Cagayan Valley, CALABARZON (Cavite-Laguna-Batangas-Rizal-Quezon), MIMAROPA (Occidental and Oriental Mindoro-Marinduque-Romblon-Palawan), Western Visayas, Central Visayas, Zamboanga Peninsula, Northern Mindanao and SOCCSKSARGEN (South Cotabato-Cotabato-Sultan Kudarat-Sarangani-General Santos City),” the PSA said.

“Bicol Region reported damage to palay production due to flooding brought by Typhoon Usman during the latter part of December 2018,” it added, citing as well reductions in area harvested and yield in Davao Region due to January floods brought by a low pressure area.

Corn, which accounted for 8.74% of total value of production, dropped 2.07% (compared to the past year’s 4.66% increase) to 2.425 MMT against an April 15 estimate of a 1.2% increase to 2.51 MMT.

“The decline was expected because of the drought which is why we are really pushing for the implementation of small and sustainable irrigation projects,” Agriculture Secretary Emmanuel F. Piñol said in a mobile phone message when sought for comment.

For Roehlano M. Briones, senior research fellow at the Philippine Institute for Development Studies, “[i]t’s pretty straight forward. I think the decline in crops is because of the impact of the El Niño.”

In a separate telephone interview, Rolando T. Dy, executive director at the University of Asia and the Pacific’s (UA&P) Center for Food and Agri-Business, said: “Drought impacted crops as expected.”

The National Disaster Risk Reduction and Management Council, which says a dry spell is characterized by three consecutive months of below-normal (21-60% reduction from average) rainfall, estimated on April 25 El Niño’s damage to rice, corn, fisheries and high-value crops at P7.96 billion, consisting of P4.04 billion (191,761 MT) in palay damage and P3.89 billion (254,766 MT) in corn damage.

Mr. Piñol had said in an April 25 social media post that “[d]espite the impact of El Niño on rice and corn production, their respective production targets can still be met as reported losses are only 0.96% (197,700 MT) of the 20 million MT target for rice and only 2.94% (254,766 MT) of the 8.64 million MT target for corn.”

All other farm subsectors gained, though slower than year-ago increments.

Livestock output, which accounted for 17.11% of total production value, grew by a slower 1.25% in terms of value (from two percent a year ago) as hog output, which accounted for 14.86% of the total, increased by 1.56% (compared to 2.39% a year ago) to 567,410 MT.

Poultry output, which contributed 16.74%, increased in value terms by 5.41% (from 5.24% a year ago) as chicken production, which accounted for 12.21%, rose 4.34% (from 4.93% previously) to 495,060 MT.

Fisheries production, which accounted for 13.45% of total farm output value, edged up by 0.97%, turning around from a 4.58% year-ago contraction, as a 3.18% drop (from -5.43% the past year) to 89,860 MT for tilapia, which contributed 1.98%, and a 4.73% contraction (from -7.38% previously) to 62,890 MT for milkfish which contributed 1.78%, were offset by a 36.16% surge (turning around from a 14.48% year-ago drop) to 53,260 MT in production of roundscad, with 0.99% of total value of production.

“Roundscad production recovered from the previous year’s slump,” the report read.

“In NCR (National Capital Region, or Metro Manila), more unloadings of roundscad were reported due to the… lifting of ban on catching roundscad in the fishing ground of Palawan and additional fishing boats from other regions” like Central Visayas, Zamboanga Peninsula and the Bangsamoro Autonomous Region in Muslim Mindanao.

This year’s first three months saw farmers get generally lower prices at the farmgate for their harvest, down 3.76% compared to a 7.64% increase a year ago. Poultry saw the biggest price drop of 8.6% from a 3.12% increase a year ago, crops came next with a 5.46% fall compared to a 6.8% year-ago rise, while livestock recorded a 1.49% contraction compared to a 13.23% increase the past year.

In its report, the PSA attributed the overall fall in crop farmgate price partly to “speculation” on lower rice prices as the government liberalized importation of the staple and replaced previous quantitative restrictions with a tariff scheme.

“‘Yung downside lang sa next semester: how will the farmer respond to the softening of palay prices,” UA&P’s Mr. Dy said.

“With the softening of palay price, ‘yun bang [will the] farmer magtatanim [plant]?”

Fishermen, however, got generally better deals, with farmgate prices rising by 6.68%, though smaller than the year-ago 9.76%.

Treasurer signals euro bond sale within the month

THE COUNTRY’s planned benchmark-sized euro-denominated notes will likely be offered “very very soon,” the head of the Bureau of the Treasury told reporters in Malacañan Palace on Wednesday, saying the government is still watching market developments for the right time to sell the debt papers.

“We are just watching closely market developments and very soon we may be able to launch the euro bond issue,” National Treasurer Rosalia V. De Leon said in the press conference, adding later with a smile when pressed for a definite timetable that the sale will be conducted “very very soon.”

Asked if the euro bonds will be sold next month, Ms. De Leon replied: “Masyadong matagal ‘yan (That’s too long a wait).”

The government plans to issue “benchmark-sized” euro-denominated bonds — meaning at least $500 million (€446.94 million) in volume — in order to diversify funding sources.

The Philippines hired banks late last month to arrange deal road shows in Zurich, London, Paris, Frankfurt and Milan from April 26 to draw investor interest.

“Based on the road show that we conducted, they are very receptive. They have been looking forward for the RoP (Republic of the Philippines) to come back to the market…” Ms. De Leon said.

On Monday, she said the Treasury is looking at issuing the notes with maturity in the “intermediate part of the curve.”

“During discussions with investors, that’s also their preference, so between seven to 10 years,” she said following the weekly Treasury bills auction in Manila City.

Fitch Ratings and S&P Global Ratings assigned a “BBB” rating while Moody’s Investors Service assigned “Baa2” to the planned debt notes two weeks ago, all a notch above minimum investment grade.

On April 30, S&P raised the country’s long-term sovereign credit rating to “BBB+” from “BBB,” bringing it a step closer to bagging a single “A” grade.

Deputy Treasurer Erwin D. Sta. Ana said late last month that the government has been “planning to go back to the euro market for the longest time,” explaining that “[t]his is part of the DoF (Department of Finance) and Treasury’s strategy to diversify its financial instruments and… investors base.”

The last time the government borrowed euros was in 2010, raising €75 million in three- and five-year multi-currency retail Treasury bonds that also raised $400 million.

It also raised €500 million in 10-year debt in 2006 in a multi-currency global bond offer along with $1.5 billion.

The state plans to borrow P1.189 trillion this year — 75% of which will be sourced domestically while the remainder will be from foreign creditors — to fund a budget deficit programmed at P624.4 trillion, equivalent to 3.2% of gross domestic product, and support increased government spending programmed at P3.774 trillion.

The state is also set to raise 6 billion yuan ($893.3 million) from a second sale of “panda” bonds. For the planned yuan-denominated debt, Ms. De Leon said the government is also waiting for the right market conditions before selling. “We have also received the approval of the regulators. Same, we are looking closely,” she told reporters on Wednesday.

The government is also looking at offering “samurai” bonds amounting to $1-1.5 billion in yen equivalent some time next semester, as well as another round of offshore dollar bonds.

In January, the Philippines sold $1.5 billion in 10-year offshore dollar bonds, priced 110 basis points (bps) above benchmark US treasuries and tighter than an initial 130 bps guidance. — Karl Angelo N. Vidal

SM Investments nets P10.7B in 3 months

SM Investments Corp. (SMIC) delivered a 26% profit increase in the first quarter of 2019, boosted the double-digit topline growth of its property, banking, and retail units.

In a statement issued Wednesday, the holding firm of the Sy family said net income hit P10.7 billion, an improvement from the P8.5 billion it posted in the same period a year ago. Consolidated revenues also went up 15% to P109 billion.

“We continued to deliver double-digit growth to both our top and bottom line in the first quarter. Performance was strong across our businesses, particularly for our banks,” SM President Frederic C. DyBuncio was quoted as saying in a statement.

The listed conglomerate’s banking unit contributed 42% of its consolidated net income for the quarter, followed by the property and retail businesses at 40% and 18%, respectively.

BDO Unibank, Inc. saw its net income soar 66% to P9.8 billion during the period, after gross revenues also jumped 37% to P53.69 billion. The company attributed the positive performance to the continued expansion of its core banking operations, the recovery of trading gains to normal levels, and strong results from bank fees and life insurance premiums.

Meanwhile, China Banking Corp. also posted a 24% uptick in consolidated net income to P1.9 billion, thanks to strong growth of its core businesses during the quarter.

For the property segment, SM Prime Holdings, Inc. realized a 16% increase in net income to P8.8 billion during the January to March period, on the back of a 14% increase in revenues to P26.5 billion.

The shopping mall business registered revenues of P15 billion, eight percent higher year on year, accounting for 56% of SM Prime’s topline for the period. This was supported by a seven percent same-mall sales growth.

The residential unit also grew its revenues by 23% to P9.2 billion, following higher construction accomplishments of projects launched from 2015 to 2017, as well as the recognition of recently launched projects.

On the other hand, SM Retail, Inc. said net income went up five percent to P2.7 billion, as revenues also rose 13% to P79 billion.

The retail business includes the food unit through SM Markets, WalterMart, and Alfamart, as well as a non-food unit through The SM Store and specialty stores. Revenues from specialty retail stores alone stood at P19.6 billion, 13% higher year on year.

SM Retail ended the quarter with 2,385 stores, composed of 63 The SM Stores, 1,388 specialty retail stores, 57 SM Supermarkets, 53 SM Hypermarkets, 194 Savemore, 52 Waltermart, and 578 Alfamart stores.

Shares in SMIC closed at P966 each at the stock exchange on Wednesday, higher by 1.79% or P17 from the previous session. — Arra B. Francia

Solaire operator’s income slides in 1st quarter

EARNINGS of Bloomberry Resorts Corp. slumped by 40% in the first quarter of the year, pulled down by lower forex gains alongside higher interest expenses.

In a statement issued Wednesday, the operator of Solaire Resort & Casino said consolidated net income stood at P2.2 billion from January to March, lower than the P3.69 billion it posted in the same period a year ago.

The listed firm noted that foreign exchange gains were “meaningfully lower” for the period, while interest expenses jumped due to the full drawdown of a P73.5-billion syndicated loan it raised in April 2018.

“The proceeds of the syndicated loan were used to retire previous debt facilities and finance the acquisition of land from PAGCOR (Philippine Amusement and Gaming Corp.) where Solaire and its Phase 2 expansion area is located within Entertainment City,” the Razon-led company said in a statement.

Bloomberry acquired the 16-hectare property in Parañaque for P37.33 billion in April last year, giving it room to further expand Solaire.

The lower profit came amid a five percent increase in consolidated net revenues to P10.77 billion in the January to March period.

Consolidated gross gaming revenues (GGR) — which includes the operations of Jeju Sun Hotel & Casino in South Korea — also ended flat at P13.87 billion.

For Solaire alone, GGR was down by one percent at P13.62 billion after VIP volumes dropped by six percent to P185.9 billion. VIP revenues accordingly fell by 16% to P5.98 billion as hold rate also slipped 3.22% from 3.61% in the first quarter of 2018.

In contrast, mass table revenues were up by 23% to P3.997 billion, after hold rate improved to 35.1% from 33.2% in the same period a year ago. This followed a 17% increase in mass table drops to P11.38 billion.

Electronic gaming machine (EGM) coin-ins stood at P54.66 billion, four percent higher year on year. Revenues from the segment rose by nine percent to P3.64 billion.

Meanwhile, Jeju Sun’s gaming revenues jumped 395% to P254 million, as it offered competitive casino programs.

Consolidated non-gaming revenues for the quarter reached P1.92 billion, 25% higher year on year, as strong performance in Solaire offset the decline in Jeju Sun.

Solaire posted non-gaming revenues of P1.91 billion, higher by 27% due to the opening of more boutiques at its retail strip called The Shoppes. This is despite lower hotel occupancy rates of 87.8%, from 93.6% last year, due to the closure and planned conversion of the Grand Ballroom into a new gaming space. — Arra B. Francia

8990 profit jumps 13% in 2018

MASS HOUSING developer 8990 Holdings, Inc. posted a 13% profit increase in 2018, driven by higher real estate sales from several projects across the country.

In a regulatory filing, the listed firm said net profit reached P4.67 billion last year from the P4.14 billion posted in 2017. Revenues also rose 15% to P11.75 billion.

8990 noted that revenues exceeded its target of P11.5 billion in 2018. Real estate sales accounted for bulk of the firm’s revenues at P11.68 billion, a 15% improvement from the previous year’s P10.17 billion. The company attributed the positive performance to higher sales from 11 projects that are currently under construction.

“It comes to no surprise that momentum in our real estate business has remained strong throughout the year. Our company is built on solid ground and the excellent results in 2018 reflects the strong interest for our products even at a time when inflation has been moving up,” 8990 said.

Hotel operations also started generating revenues at P55.5 million. The company earlier said that it will spend P5 billion over the next five years for the development of projects under hotel brands Adama, Kura, and Argo.

8990 spent P8 billion in capital expenditures in 2018. This year, it allocated P12 billion to support its goal of recording P13.5 billion in revenues.

The company is banking on sales from Urban Deca Homes Manila in Tondo to drive its revenues for the year. The 13-tower residential complex will offer more than 13,000 units worth about P20 billion. — Arra B. Francia

GT Capital targets single-digit bottom-line growth this year

By Arra B. Francia, Senior Reporter

GT Capital Holdings, Inc. aims to grow its bottom line by mid-single digits in 2019, banking on the recovery of its auto unit and the continued growth of its banking and property businesses.

“We are trying to shoot for single-digit growth,” GT Capital President Carmelo Maria Luza Bautista told reporters after the company’s annual shareholders’ meeting in Makati on Wednesday.

If realized, this would mark a turnaround from the six percent profit decline the conglomerate saw in 2018. It booked a net income of P13.4 billion as consolidated revenues fell 10% to P215.8 billion.

GT Capital was weighed down by Toyota Motor Philippines (TMP)’s performance last year due to the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law, which increased the excise tax on automobiles.

Retail vehicle sales dropped 17% to 153,004 units, resulting to a 14% decline in consolidated revenues to P159.2 billion. Net income accordingly slumped 39% to P8 billion in 2018.

“Hopefully, makikita mo pa rin ’yung (you can see) early signs of recovery. In fact it was reported already in the papers this morning that volume sales are starting to see a turnaround. So hopefully magtuloy-tuloy na ’yun (this will continue),” Mr. Bautista said.

Aside from introducing new models for TMP, the company is also supporting its auto business by venturing into used car auctions. Its unit, GT Mobility Ventures, Inc. has recently partnered with auction house operator Japan Bike Auction Co., Ltd. to form JBA Philippines.

The auction house business is scheduled to start operations by the third quarter of the year. Mr. Bautista expects the unit to start contributing to revenues by 2020.

The company also expects it banking unit, Metropolitan Bank and Trust Company, to continue its strong growth, especially on loan financing.

The property business, through Federal Land, Inc. and Property Company of Friends (Pro-Friends), is also seen to continue its growth momentum. Mr. Bautista earlier said they are aiming to grow property’s contribution to net income to about 15-20% in the next five years, against its 2018 contribution of 10.5%.

“The property momentum is strong, so we are hoping there will be a difference in the property side,” Mr. Bautista said.

GT Capital will be spending P51.7 billion in capital expenditures this year, bulk of which will be used at the parent level for its new ventures.

Federal Land cornered P12 billion of the spending, for land banking purposes and the construction of office buildings, while Pro-Friends will receive P2.3 billion to fund its expansion. Metrobank will get P2 billion for IT system upgrades and expansion, while insurance provider AXA Philippines will have about P200 million for computer and IT upgrade.

Shares in GT Capital slipped 4.89% or P44 to close at P855 each at the stock exchange on Wednesday.

Search for PLDT president, CEO continues

PLDT, Inc. Chairman Manuel V. Pangilinan said the search for a new president and chief executive officer (CEO) may take longer.

Mr. Pangilinan, who has been sitting as president and CEO of PLDT since the start of 2016, told reporters Tuesday that he is ready to relinquish the two posts as soon as he finds a worthy replacement.

“Siguro [Probably] delayed a bit, realistically. You have to give some time to Al to put both his legs under the table,” he said when asked about PLDT’s timeline for finding a new president and CEO, referring to newly appointed Chief Revenue Officer Alfredo S. Panlilio.

Last week, PLDT told the stock exchange Mr. Panlilio was returning to the company to replace Ernesto “Eric” A. Alberto as chief revenue officer by July 1.

Mr. Alberto assumed the position in 2016 and led the company’s turnaround in the consumer wireless business and sustained double-digit growth in the home and enterprise units.

But Mr. Pangilinan noted his departure is not expected to impact the company’s operations significantly, as the unit heads were kept in position.

“We know Eric Alberto has really strong unit heads. Ren (Oscar Enrico A. Reyes, Jr.) for the individual and the Home, Jovy (I. Hernandez) for the Enterprise and Alex (Alejandro O. Caeg) for sales and channels. Of course we’ll miss Eric, but I think Al — who is an alumnus of PLDT, knows the organization and is digital and understands what we’re doing. I think (he) will ably fill up the position, and I think will probably bring a calming influence on the organization,” he said.

Mr. Panlilio admitted the appointment was a surprise, saying it happened “very quickly.”

“There was of course something that happened in PLDT and the change that had to (happen), a major decision that (Mr. Pangilinan) had to make so that we can continue to go after the objectives set by (him) for PLDT,” Mr. Panlilio said.

Asked what were Mr. Pangilinan’s marching orders for him, Mr. Panlilio said: “To continue to grow the business. I think that’s the main thing.”

He said he personally wants to look into the service delivery of PLDT and see how it could be improved to be more “customer centric.”

Hastings Holdings, Inc. — a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — maintains interest in BusinessWorld through the Philippine Star Group, which it controls. — Denise A. Valdez

First Gen wants to get more partners for LNG terminal project

By Victor V. Saulon, Sub-Editor

FIRST GEN Corp. is looking to bring in more partners for its liquefied natural gas (LNG) terminal project as it schedules to break ground by month’s end and targets to make a final investment decision by early 2020 in time for a 2024 completion date.

“We aim to finalize the financing for the project and execute the relevant key project agreements, including LNG supply and firm up our strategic partners for the project,” Francis Giles B. Puno, First Gen president and chief operating officer, told stockholders during their annual meeting on Wednesday.

“In fact, we are going to have our formal groundbreaking at the end of the month,” he added.

Mr. Puno said the existing partnership with Tokyo Gas Co., Ltd., which was forged in December last year, will proceed with the project ahead of a final investment decision (FID).

“We anticipate that we’ll bring in more partners, but in the meantime between ourselves and Tokyo Gas, we want to proceed already. So the formal FID will entail a bigger, hopefully a complete group of owners,” he told reporters, adding that a new investor could be a Filipino entity.

He said the LNG terminal could be completed in four years, and that the existing partners do not intend to underwrite the $1-billion project cost.

“In our case, probably right now we have 80%, Tokyo Gas has 20%. We don’t intend to own the whole 80%, so it can go down to 50%, 51%, so that’s the flexibility,” he said.

Jonathan C. Russel, First Gen executive vice-president and chief commercial officer, said a number of nationalities had expressed “a great deal of interest” in the project. He said the partnership talks include those with potential fuel suppliers.

“I can’t give you any names, but we are in advanced discussions with a number of entities, so it’s possible that in the near future, we’ll announce additional partners that are coming in,” he said. “Within the next few months, we may have additional announcements.”

“We can accommodate more than one partner. It’s just a question of trying to choose partners that add the most value and also will be easy for us to work as a group, good chemistry and a strong combination,” Mr. Russel said.

In the meantime, First Gen is setting aside up to $250 million for this year’s capital expenditure, most of which will be used by subsidiary Energy Development Corp. (EDC).

“For consolidated [capex], it’s about $220 to $230 [million], bulk of that will be with EDC, it’s about $150 [million], then the rest would be with gas,” Emmanuel P. Singson, First Gen Corp. senior vice-president and chief financial officer, said.

However, EDC President and Chief Operating Officer Richard B. Tantoco said the consolidated amount could reach $250 million to include additional budget for a geothermal-related project.

“Some of it will be for projects, and then some of it will be for things that we’ll do in the power plant like cooling tower upgrades,” he said. “So it’s investments that will optimize the assets’ flexibility.”

Last year, the group’s consolidated capex was $100 million, Mr. Singson said.

On Wednesday, shares in First Gen slipped by 5.88% to close at P20 each.

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