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Sy’s SMIC posts 6% profit growth, but shares slip

By Arra B. Francia, Reporter

THE HOLDING FIRM of country’s richest man Henry Sy, Sr. clocked in a 6% growth in earnings in 2017, fueled by the continued expansion of its property, retail, and banking units.

In a statement issued Wednesday, SM Investments Corp. (SMIC) said net income grew to P32.9 billion last year, higher than its earnings in 2016. The growth comes amid a 9% increase in consolidated revenues to P396.1 billion.

“Our core businesses continued to deliver strong results in 2017 with recurring net income growth of 9%, driven by overall growth in the economy and our nationwide expansion plans. Our property and specialty retail businesses delivered particularly strong results,” SMIC President Frederic C. DyBuncio said.

SMIC has three core business interests, namely: property, banking, and retail, which contributed 40%, 38%, and 22% to its total earnings, respectively.

The property business, through SM Prime Holdings, Inc. (SM Prime), delivered a 16% uptick in recurring profit to P27.6 billion for the year, after posting a 14% increase in consolidated revenues to P90.9 billion.

SM Prime attributed the positive performance to the increase in rental revenues from malls, as it ended the year with 67 shopping malls in the Philippines covering a gross floor area (GFA) of 8 million square meters, (sq.m.) and seven more in China with a GFA of 1.3 million sq.m.

The property developer also noted strong sales take-up of housing units under SM Development Corp., pushing reservations sales 21% higher to P57.8 billion for the year.

Other than mall and housing, SM Prime also has office buildings, hotels, and convention centers under its portfolio.

BDO Unibank, Inc. said it penciled in a record-high profit for 2017, inching up 7% to P28.1 billion against the level booked in 2016. This was due to   efforts to expand the company’s lending, deposit-taking, and fee-based businesses. Gross customer loans amounted to P1.8 trillion, 18% up year on year, allowing net interest income to grow 25% to P81.8 billion.

SMIC’s other banking unit, China Banking Corp., generated P7.4 billion in 2017, 15% higher than what it reported in 2016. Deposits in the bank rose 17% to P635 billion due to the introduction of new branches, while gross loans climbed 17% to P454 billion.

For retail, the group reported a 7% increase in revenues to P297.4 billion, resulting to a net income of P10.4 billion. SM Retail, Inc. consists of The SM Store, specialty stores and SM Markets.

The company was able to open two new The SM Stores last year, located in SM CDO Downtown Premier and SM City Puerto Princesa, bringing its total department stores to 59 with a gross selling area of 760,000 sq.m.

On the other hand, SM Markets, which includes SM Supermarket, SM Hypermarket, and Savemore, added 42 new stores located mostly in the provinces last year. The company said it employs a multi-format growth strategy in a bid to address the lack of organized retail in various regions of the country.

SM Retail added 341 new outlets in 2017, bringing its retail business portfolio to 2,032 outlets, 59 of which are The SM Stores, 1,299 specialty retail outlets, 52 SM Supermarkets, 47 SM Hypermarkets, 181 Savemore, 46 Waltermart, and 348 Alfamart Stores.

“The underlying performance of our retail operations remained good, led by strong growth in our higher margin specialty retailing and with the addition of the successful Miniso variety store chain during the year,” Mr. DyBuncio said.

Sought for comment, Philstocks Financial, Inc. Head of Research Justino B. Calaycay, Jr. said the results were “disappointing” for SMIC.

“It’s rather slow actually… We expected a bit more, probably double-digit so this is a bit disappointing for SM. I think the share prices were active to it, dropping some 3% today. We expected it somewhere in the low double digits, within 10-15%,” Mr. Calaycay said in a phone interview yesterday.

Shares in SMIC gave up P30 or 3.09% to close at P940 each at the stock exchange on Wednesday.

“We are concerned about this moving forward, because of a lot of concerns like inflation might start to kick in. It might start to Impact on the purchasing power of consumers, so this will greatly affect the sales of SM malls,” Mr. Calaycay said.

Acquisitions boost Chelsea Logistics’ income

By Patrizia Paola C. Marcelo,
Reporter

CHELSEA Logistics Holdings Corp. (CLC) posted a 17.5% growth in net profit last year to P161 million as revenues more than doubled after the acquisition of shipping companies and related businesses.

In a disclosure to the stock exchange, the company said last year’s profit from 2016’s P137 million included a one-time gain on bargain purchase valued at P158 million.

Chryss Alfonsus V. Damuy, CLC president and chief executive officer, said the capital raised from the company’s initial public offering on Aug. 8, 2017 allowed the significant expansion of businesses and operations.

“As a result of the acquisitions during the last quarter of the year, we were able to increase our market share not only in the shipping industry but covering the end-to-end supply chain solution of the logistics industry,” he said.

CLC described 2017’s profit growth as “tempered” after the near 100% increase in financings costs attributable to loans availed in proportion to the purchase of some of the new vessels.

Last year, the company generated P3.9 billion in revenues, which it said was 140% higher than 2016’s. It attributed the increase to the acquisition of a stake in 2GO Group, Inc., as well as Starlite Ferries, Inc. and Worklink Services, Inc. The acquisitions resulted in additional freight revenues of P1.3 billion, passage revenues of P800 million, and P200 million from logistics services.

Revenues from tugs assistance services doubled to P263 milion in 2017 from P118 million in 2016, also a result of the acquisition of Davao Gulf Marine Services, Inc.

CLC in March last year acquired a 28.15% indirect economic interest in 2GO Group, taking over its management.

It also acquired last year 100% of Starlite Ferries, a Filipino company with 14 vessels, as well as WorkLink Services, Inc., a cargo forwarder for food, garments, among others.

Mr. Damuy said CLC expects the acquired vessels to bring profitability starting this year.

In late 2017, CLC through its subsidiaries purchased four more vessels and ordered more during the first quarter. It expects deliveries within the year.

Earlier this year, it signed a contract with Kegoya Shipyard for the construction of one brand new roll-on roll-off passenger ship with an option to order an additional three units with delivery dates from 2019 to 2020.

CLC said that as of end-2017, the market capitalization of the company was at P16 billion based on the closing price of P8.78 per share.

On Wednesday, shares in the company jumped 6.29% to close at P7.60 each.

Stock exchange purges dormant brokers

THE Philippine Stock Exchange, Inc. (PSE) has removed inactive trading participants as it works on complying with the single-industry cap on exchange ownership.

In a statement issued Wednesday, the PSE said it has revoked the status of inactive trading participants who also hold about 2.34% of the total outstanding capital stock in the company. The PSE earlier noted that 14 out of 52 inactive trading participants held shares in the company.

The bourse operator has also declared as vacant the trading rights of the dormant brokers.

The PSE said the Securities and Exchange Commission (SEC) will then complete the process of revoking the registration of dormant brokers, should they fail to amend their primary purpose to that of a non-broker business.

The removal of the inactive brokers, alongside PSE’s stock rights offering of 11.5 million shares this March, will bring down ownership of trading participants in the company to 22.05%.

“The company is confident that with the offer fully underwritten and the procedures already being implemented by the company and the SEC, this will be fully achieved,” the SEC said.

Once the SEC completes its administrative procedures on the dormant brokers, their ownership will further be brought down to below 20%.

The move is in line with the single-industry limit set by the Securities Regulation Code, which states that “no single industry or business group shall beneficially own or control, directly or indirectly, more than 20% of the voting rights of the Exchange Controller.”

The PSE’s statement comes after the SEC called out the former for inaccurate and misleading information regarding the reduction of broker ownership in the bourse. The SEC then implemented a trading halt on PSE shares from 10:19 a.m. to 1:30 p.m. on Wednesday.

Shares in PSE gained a peso or 0.41% to close at P245 each on Wednesday.

Ensuring compliance with the single-industry cap is also necessary in obtaining the SEC’s approval for the PSE’s proposed acquisition of the Philippine Dealing System Holdings Corp.

To finalize the deal, the PSE has filed a petition with the SEC for exemptive relief, allowing the former to own more than 20% of the fixed-income exchange. — Arra B. Francia

Discovery World to expand its resorts business

DISCOVERY WORLD Corp. (DWC) has hiked its stake in one of its subsidiaries, as the company targets to expand its resorts business.

In a disclosure to the stock exchange on Wednesday, the company said it would subscribe to 26.2 million shares, or 100% of the total outstanding shares in Balay Holdings, Inc. With a par value of P1 per share, the subscription was priced at P26.2 million.

“This acquisition is in line with DWC’s business and will create opportunities for expansion of the corporation’s resort business,” the company said.

DWC said Balay Holdings has properties in Boracay island that may be used as the staff house for its employees. The listed firm operates a hotel and resort business in the island called Discovery Shores Boracay, established back in 2007.

In line with the transaction, Balay Holdings will be increasing its authorized capital stock to P50 million, from the current P3.2 million, which requires approval from the Securities and Exchange Commission.

Incorporated in 1993, DWC was called Southern Visayas Property Holdings, Inc. before changing its name to the present one in 2013. The company’s interests lie in the development, acquisition, administration, construction, and operation of hotels, resorts, apartelles, townhouses, condominiums, and other tourist-related structures.

The company’s other properties include Club Paradise in Dimakya Island in Coron, Palawan, Platitos Resto Bar, Sands Lounge, Indigo Resto Bar, and Sunken Pool Bar.

DWC is also ramping up development in Palawan, one of the country’s top tourist destinations. In 2016, it incorporated Long Beach Property Holdings, Inc. to handle the company’s property developments in Palawan. DWC has previously purchased 98.87% of Cay Islands Corp., which has businesses in Palawan.

DWC booked a net income attributable to the parent of P26.6 million in the first nine months of 2017, 6% higher year on year. Revenues, meanwhile, jumped 31% to P535.9 million for the period.

Shares in DWC lost 29 centavos or 10.03% to P2.60 apiece at the Philippine Stock Exchange on Wednesday. — Arra B. Francia

TDF yields climb across tenors as demand eases

By Melissa Luz T. Lopez
Senior Reporter

YIELDS under the central bank’s term deposit facility (TDF) climbed across all tenors yesterday, as demand eased particularly for the week-long instruments.

The Bangko Sentral ng Pilipinas (BSP) received P117.127- billion tenders at its Wednesday auction, slightly higher the P110 billion on offer but less than the P130.488-billion bids last week.

Banks sought higher rates across all tenors compared to a week ago.

The seven-day tenor even saw bids drop below the P50 billion offered by the central bank to P43.751 billion, compared to the P53.368-billion demand seen the previous week. As a result, the average yield climbed to 3.0685% from 2.8164%.

Bids for 14-day term deposits also slipped to P44.497 billion from P46.765 billion, although still higher than the P40-billion offer. This is the third auction that carried a two-week term.

The new instruments fetched a 3.0984% average yield, also higher than 2.9798% previously.

Demand for the 28-day instruments also narrowed to P28.879 billion from the P30.355 billion which investors wanted to park last week, though still higher than the P20 billion placed on the auction block.

Rates climbed to average 3.1665% from the 3.0258% yield seen during the Feb. 21 exercise.

The TDF is the central bank’s main monetary tool to capture excess funds in the financial system. The facility allows banks to park idle cash under the BSP in exchange for a small return.

Any excess cash that have not been deployed for loans, foreign exchange and debt payments can be parked under the central bank window in order to make small gains.

This system, in turn, is expected to bring market rates closer to the three percent benchmark set by the BSP.

The BSP employs the “auction-based” operations to have a better handle on market loan rates, after it introduced a one percentage point cut in the 20% reserve requirement ratio (RRR) imposed on universal and commercial banks.

The adjustment, which takes effect on March 2, has been deemed “operational” and “neutral” in terms of monetary policy orientation.

“The key reason it (BSP) is lowering RRR is to promote a more efficient and level financial system that’s less biased against deposit-taking financial institutions which creates market distortions,” BSP Governor Nestor A. Espenilla, Jr. told reporters over the weekend.

The reserve cut will unleash some P90 billion into the financial system, which monetary authorities expect to be mopped up through the TDF and other policy tools.

Globe taps US firm Amdocs for systems upgrade

GLOBE Telecom, Inc. has hired Missouri-based Amdocs Ltd. to assist the telecommunications company in modernizing its information technology (IT) operations, the software firm said in a statement.

Amdocs said under a multi-year service agreement signed with Globe, its Amdocs Intelligent Operations will assist the local company in managing third-party systems and cloud management solutions.

The deal includes modernizing and running IT operations for multiple lines of businesses, such as prepaid and postpaid mobile services, fixed-line broadband, and enterprise services.

The number of years covered by the deal or its cost was not disclosed.

Globe Telecom is also tapping Amdocs for artificial intelligence, chatbots, and machine learning technologies to increase business agility and flexibility, and to enable faster resolution of issues and better customer experience.

“We are committed to enrich the lives of our customers in the digital age by continuously innovating our brand and delivering a diversity of new offerings to market faster by increasing our service agility and operations. As we continue our journey towards the digital future, automation will play a crucial role in setting new benchmarks for customer experience,” said Ernest Cu, president and chief executive officer of Globe Telecom said in a statement.

Amdocs was also tapped by Globe rival PLDT, Inc. The two signed a $300-million agreement for upgrading the business technology systems of the company for seven years. Amdocs Intelligent Operations is part of AmdocsONE, an open, modular and integrated solution set. — Patrizia Paola C. Marcelo

French Crémants are a delicious, sparkling alternative for Champagne

MADE BY the same method as Champagne, French crémants are the latest buzz-grabbers in the expanding bubbly universe — and a wise choice if you’re looking to move on from boring prosecco. Think of them as the underdogs of the French wine world, offering sophisticated Gallic flair without the Champagne price tag.

“Crémant” is an official term used throughout France for fine sparkling wines made outside Champagne by the “methode traditionelle.” That’s the process by which wines get their bubbles from a second fermentation inside the bottle, then age for months on the spent yeast cells left behind, giving them character and a creamier texture.

For decades, places known for great reds and whites — including Burgundy, Alsace, the Loire Valley, and even Bordeaux — have been making under-the-radar sparkling wines, but crémant first appeared officially on labels only in the mid-1970s. Eight regions can now use the term for their fizz; the latest addition is Savoie, in the Alps. (Beaujolais also wants in, hoping to tap into global demand for fizz, which is projected to grow 14% by 2020; it aims to gain appellation status for sparkling gamay in a few years.)

Unlike Champagne, a bubbly that’s almost always chardonnay and/or pinot noir — and sometimes pinot meunier — crémants often rely at least partly on local varieties. In the Loire, that means chenin blanc; in Alsace, pinot blanc, as well as auxerrois; and in Savoie, jacquere and altesse. So don’t expect them to taste exactly like Champagne.

Naturally (this is France, after all) the law regulates the percentages of specific grapes and the amount of necessary aging, and it dictates hand-harvesting and gentle pressing, but each region contributes some rules of its own. The best producers make versions from single vineyards and routinely age their wines longer, and it shows.

Here’s my selection of top examples from five regions.

CRÉMANT D’ALSACE
Picturesque Alsace, in the foothills of the Vosges Mountains of northeast France, produces more than 50% of all French crémants. Many are excellent and more widely available than examples from other regions.

• NV Jean-Baptiste Adam Brut Rosé ($21) — Super frothy, with intense strawberry fruit flavors, this pale, pink wine has mouthwatering appeal, zing, and a succulent elegance.​​​

• NV Domaine Saint-Remy Brut Cuvee Prestige ($24) — Bright and crisp, ideal for an aperitif, this bottle has notes of plums and golden delicious apples and shows off very fine, tiny bubbles.

• NV Jean-Baptiste Adam Brut Les Natures ($25) — This organic and biodynamic domaine has been growing grapes for more than 400 years. A light, elegant blend of pinot blanc, chardonnay, and pinot noir, this bottling has subtle citrus-y charm and fresh apple-y purity.

• 2015 Albert Mann Extra Brut ($26) — Deep and creamy, this full-bodied blend of pinot blanc, auxerrois, and pinot noir from a family estate tastes of tart, spicy apples.

• Domaine Valentin Zusslin Brut Zero San Soufre ($30) — A brother-and-sister team makes this very dry, crisp, complex blend of auxerrois, riesling, and chardonnay at a biodynamic estate. Natural-wine lovers take note: It’s made with no added sulfur.

CRÉMANT DE BORDEAUX
Bordeaux is the only region whose production of crémant is shrinking, which may explain why very few have impressed me.

• NV Philippe Raguenot Crémant Blanc ($25) — This 100% semillon, from a family estate, is light and crisp, with fresh green apple and herbal notes.

CRÉMANT DE BOURGOGNE
Amazingly, just about every village in Burgundy produces grapes for crémant, but the key areas are in northern Chablis, where the wines are zesty and light, and in southern Cote Chalonaise, where wines are richer and rounder. Chardonnay and pinot noir dominate, as they do for still wine. But producers also use other varieties grown in the region, such as pinot blanc, aligote, and gamay. Last year, in a bid to upgrade quality, the region instituted new, additionally aged ranking designations: “Eminent” and “Grand Eminent.”

• Clotilde Davenne Extra Brut ($25) — Clotilde Davenne, one of few women making wine in Chablis, is behind this deliciously dry, frothy wine with aromas of warm bread and lemon zest and crisp, green apple flavors.

• NV Parigot & Richard Brut Rosé ($25) — You’ll see this domaine’s fizz at such top restaurants as New York’s the NoMad. The bright, salmon-colored rosé is 100% pinot noir, with lively, tangy, strawberry flavors that are perfect for a decadent brunch.

CRÉMANT DU JURA
Sparkling wine has grown rapidly here and now accounts for one in four bottles in the ancient, now trendy Jura region of eastern France. White crémants must be at least 50% chardonnay, and rosés must be at least half-pinot noir or the local red, poulsard.

• 2015 Domaine de Montbourgeau ($26) — This all-chardonnay, from a top producer in the village of L’Etoile, is full of mineral flavors and zingy acidity.

• 2015 Andre et Mireille Tissot (Stephane Tissot) — Extra Brut Indigene ($35) Tissot produces 7,000 or so bottles of this extra brut fizz from chardonnay, pinot noir, and Jura red grapes poulsard and trousseau. Superior to most non-vintage Champagnes, it shows off honeysuckle aromas, tangy, citrus flavors with a salty complexity, and creamy, lush bubbles.

CRÉMANT DE LOIRE
The Loire is a veritable hotbed of crémant producers. Long ago, the fizz here was almost as famous as that of Champagne. But the wines taste very different because the primary grape for white is chenin blanc; for rosé, it’s cabernet franc.

• 2014 Domaine Vincendeau ($22) — Made from 100% chenin blanc vines, this bottle is bright and mineral, with aromas of white flowers and soft bubbles. Aging for 16 months on the lees gives it serious depth and layers of flavor.

• NV Château de Brézé Blanc ($22) — The château, a tiny castle with a moat and an underground fortress, is a Unesco World Heritage site with organic vineyards on chalky soils. This blend of chenin blanc and chardonnay is luscious and bright, with aromas of white flowers and a mineral, zingy taste. — Elin McCoy, Bloomberg

Powell nods to stronger US economy, affirms gradual rate hike path

WASHINGTON — Federal Reserve Chairman Jerome Powell, in his first public appearance as head of the US central bank, vowed on Tuesday to prevent the economy from overheating while sticking with a plan to gradually raise interest rates.

Testifying before the US House of Representatives’ Financial Services Committee, Mr. Powell acknowledged the economy had strengthened recently, a remark that prompted investors to increase bets on four rate increases in 2018.

The Fed’s last round of economic projections in December pointed to three rate increases this year.

Mr. Powell’s overall tone, however, was one of continuity, as he told lawmakers the Fed would balance the need to guard against excessive inflation with the benefits of allowing the economy to enjoy the “tailwinds” of tax cuts and strong global growth.

He said the Fed was in a “process of discovering” how low unemployment could fall before inflation took hold. The US unemployment rate is at a 17-year low of 4.1%.

“The [Federal Open Market Committee, or FOMC] will continue to strike a balance between avoiding an overheating economy and bringing… price inflation to two percent on a sustained basis,” Mr. Powell said.

“Some of the headwinds the US economy faced in previous years have turned into tailwinds,” he added, noting recent fiscal policy shifts and a global economic recovery.

Still, “inflation remains below our two percent longer-run objective.”

“In the (FOMC’s) view, further gradual rate increases in the federal funds rate will best promote attainment of both of our objectives,” Mr. Powell said.

The testimony was Mr. Powell’s first signal as Fed chief that the Trump administration’s massive tax overhaul and spending plans will not prompt any dramatic shifts in Fed policy.

“Gradual” has been the operative word used by the central bank since it began raising rates under Mr. Powell’s predecessor, Janet Yellen, in late 2015.

The Fed is expected to push through its first rate increase of 2018 at its next policy meeting in March, when it will also provide fresh economic projections and Mr. Powell will hold his first press conference.

“There was not much couching of the growth story. It was pretty positive,” said Brian Coultan, chief economist with Fitch Ratings. “The balance of risks is shifting for the Fed.”

US short-term interest rate futures dropped and yields of US Treasuries rose on Tuesday. US stock indexes fell and the dollar was stronger against a basket of currencies.

SAFE SCRIPT
Mr. Powell’s appearance before the House panel was largely devoid of fireworks or friction, a contrast to some recent hearings in which Fed chiefs have been grilled aggressively over the central bank’s bond buying to fight the 2007-2009 financial crisis and the resulting massive swelling of its balance sheet.

Much of the questioning on Tuesday amounted to a review of where the Fed stands on financial regulation.

Mr. Powell, who was nominated by Republican President Donald Trump and later confirmed by the Republican-controlled US Senate, said he felt the Fed’s current tools for managing interest rates, a steady decline of its balance sheet, and its two percent inflation target were working fine.

That could serve as a subtle rebuff to conservatives who don’t like the central bank’s practice of managing short-term interest rates through payments on the reserve deposits of banks, but also to some of Mr. Powell’s Fed colleagues who want to mount a sweeping review of the central bank’s inflation target.

The current framework “is working, the market understands it,” Mr. Powell said.

To questions suggesting the Fed needs to more quickly or dramatically reduce its bond holdings, Mr. Powell said, “I like our current plan.”

Pressed by some Democratic lawmakers about the impact of inequality on the economy, the gap in unemployment rates between whites and blacks, and on the economic implications of stricter immigration, Mr. Powell largely affirmed the Fed’s commitment to its goal of maximizing employment with stable prices.

Fed officials, particularly at the regional level, have lately focused their research on parts of the economy left behind during the recovery from the crisis, and some macroeconomic research has suggested rising inequality could impair overall growth.

“Our part of it is to take seriously our obligation to achieve maximum employment… I would not want to presume policies away from our mandate,” Mr. Powell said.

Mr. Powell used his testimony to strike notes likely welcomed by Republicans, including promises of “transparency” and a nod to the monetary policy rules some of them favor.

“I am committed to clearly explaining what we are doing and why we are doing it,” Mr. Powell said.

But in his remarks and in the Fed’s monetary policy report to Congress last week, he stuck close to a safe script, mentioning none of the new initiatives some of his colleagues have pushed for, such as a review of the Fed’s inflation management system.

The monetary policy report acknowledged “valuation pressures” in parts of the economy, and noted the recent return of volatility in stock markets.

Though rising long-term interest rates and recent equity market volatility have tightened financial conditions, Mr. Powell said, “we do not see these developments as weighing heavily on the outlook for economic activity, the labor market and inflation.”

Rather, he said, “the robust job market should continue to support growth in household incomes and consumer spending, solid economic growth among our trading partners should lead to further gains in US exports, and upbeat business sentiment and strong sales growth will likely continue to boost business investment.” — Reuters

Antitrust body clears Japanese companies’ acquisition deal

THE Philippine Competition Commission (PCC) has approved Ningbo Joyson Electronic Corp.’s acquisition of substantial assets in Takata Corp.

In its decision signed Feb. 27, the antitrust body’s mergers and acquisitions office found that the transaction between the Japan-based firms “does not result in substantial lessening of competition in the relevant market.”

“There are no product overlaps between the parties in the domestic market (Philippines),” read the PCC decision, which was quoted in a Wednesday statement.

Under the deal, the Takata assets that fall within the proposed transaction will be fully owned by Ningbo Joyson Electronics.

Ningbo Joyson Electronics is a manufacturer of automotive electronics and functional modules for global distribution, with focus on China. Its subsidiary, Key Safety Systems Holdings, Inc., is engaged in the research and development, design, manufacture, marketing and sale of automotive safety systems such as air bags, seat belts, and steering wheels.

Takata is also into automotive safety systems business. Its subsidiary Takata (Philippines) Corp., which operates a plant in Biñan, Laguna, manufactures air bag fabric and cushion, and seat belt webbing, for export to related parties under the Takata Group.

To date, the PCC has reviewed 151 deals, 41 of which were global mergers with a combined worth of P2.25 trillion. Majority of these derive from the manufacturing, financial, electricity, real estate and transportation sectors.

PCC, the country’s antitrust body, is mandated under the Philippine Competition Act to review mergers and acquisitions that meet the P1-billion threshold to ensure that these deals will not harm the interest of consumers.

The commission earlier said it is mulling to increase this threshold, a review that remains within the ambit of its authority. — Janina C. Lim

Trying to halt the end of the world as we know it

MEMENTO MORI: remember you will die. It’s not exactly an appetizing thought, but one has to remember that we are currently under an extinction event, the sixth, according to scientists.

While other extinction events in prehistory were due to freak accidents or an ever-changing planet, scientists claim that the present extinction event is due to human impact on the environment. Overfishing and the alteration of the ocean’s chemical structure due to human activity are affecting fish populations in the oceans, and consequently, on our plates.

While we can shrug it off for now, soon fish will have nothing to eat, and after that, guess who loses our next meal? That’s right: us.

Sustainable Seafood Week, a cooperative event held by seafood distributor Meliomar, Inc., with the government, several environmental groups, and luxury food outlets in Manila, is now on its third year. Meliomar, Inc. caters to many luxury outlets, providing sustainably raised or fished seafood, such as Artesmar Yellowfin tuna. The event was launched earlier this week at the Marriott Manila, and food outlets in on the cause will end their connected promotions by mid-March.

It’s not always easy to associate big business with sustainability, and one usually relies on nongovernment organizations (NGOs) to whip sentiment on causes. Rose Mendez, Meliomar’s Business Development Manager says: “The problem with NGOs is, they cannot do something… for the hotels.” Apparently, hotels among the country’s top buyers of seafood, sometimes going through tons of fish a year. “NGOs cannot do something about it. They can only do something about policy making with the government. The real initiative should be from the private sector, like us.”

One can ask about their motives behind joining a cause that could hurt their interests: raising or catching fish sustainably costs time and money. “We actually have a low profit margin because we’re working on the ground. It doesn’t mean that we’re earning a lot, but we have to give a lot to the people who work on the ground,” said Ms. Mendez.

On the other hand though, sustainability provides benefits to the consumer. “Sustainability is connected to quality. When you talk about sustainability, it’s always about quality… about certification. When you have certification, [you’re] connected to the supply chain. You always know where it comes from,” said Ms. Mendez.

Then there’s a more pressing benefit to be had from supporting a movement like this. It is, Ms. Mendez, a bit surprised, answered, “For your future.”

Watch out for events in these establishments connected to the Sustainable Seafood 2018 initiative: lectures and exhibits at Discovery Suites, New World Manila Bay, Hyatt City of Dreams, Conrad Hilton Manila, Accor Group hotels in Sofitel, and Enderun Colleges; an oyster shucking contest at the New World Makati, a cooking contest by Meliomar, and sustainable seafood and cocktails in Antonio’s. Each of the participating establishments has their own special sustainable seafood dishes lined up until March, as well. — Joseph L. Garcia

For banks, digital is way to go as market evolves

By Karl Angelo N. Vidal

PHILIPPINE banks should digitize processes and their business in order to remain relevant amid disruption caused by financial technology (fintech) as well as operational challenges, bank officials said on Wednesday.

In the 2018 Retail Banking Forum held on Wednesday that was organized by Asian Banking & Finance Magazine, Union Bank of the Philippines, Inc. President and Chief Executive Officer Edwin R. Bautista said lenders in the country should operate as an “IT (information technology) company with a banking franchise” in order to keep up with evolving technologies that revolutionize the way the industry does business.

“By the time we become a digital bank, the issue is what if banking is no longer what it is today and our business model is no longer relevant? That’s how our transformation should be…”Mr. Bautista said, quoting UnionBank Chairman Justo A. Ortiz.

“In order to address that, we need to be an IT company with a banking franchise.”

Rizal Commercial Banking Corp. (RCBC) Head of Digital Banking Margarita B. Lopez shared this view, saying that going digital should no longer be treated as just an isolated endeavor.

“Digital is no longer a channel or function. It’s already a fiber by which we should define our business models or even our approach to collaboration so we may remain relevant and useful and each one has its own play on who to partner with,” Ms. Lopez said.

Mr. Bautista cited application programming interface, data analytics, robotics, artificial intelligence and blockchain as technologies that banks should embrace in order to keep up with the times.

“Market developments are forcing banks to hire technology to remain relevant to the customers,” Mr. Bautista noted.

“The internet and mobile devices you all have are changing customer habits, and so we must respond.”

While some lenders remain wary of financial technology “eating their lunch and eventually wiping them off the face of the Earth,” Mr. Bautista said banks still have an unquatifiable prime asset: the customer’s trust.

“Technology is something that is widely available to everyone. We actually have the advantage of customers trusting us. If we’re able to transform this, and combine fintechs with our innate advantages and assets… we might still win the war.”

Despite technology changing the way people bank, some senior bank officials in the same forum wondered how far change can go across the country.

Philippine Savings Bank Vice-President Jose Martin A. Velasquez noted that continued use of analog mobile phones as well as poor, limited Internet connection in the Philippines limit the reach of banks’ digital initiatives.

“That’s one major challenge when you want to roll out certain services digitally,” RCBC’s Ms. Lopez noted.

“Even if those smartphones can get there, we still need to have those signals strong enough.”

She also noted that the country’s lack of a national identification system — long advocated but never enacted due to the “Big Brother” specter critics raise — hinders lenders’ efforts to deliver certain digital services.

Philex income rises despite lower output

PHILEX MINING Corp. on Wednesday reported a 6% increase in earnings for 2017 despite reaping a lower output for gold and copper.

In a disclosure to the stock market on Wednesday, Philex said its reported net income reached P1.66 billion while its core net income went slightly up by 1.8% at P1.69 billion from 2016’s P1.66 billion.

Due to lower output, total operating revenues were down by 2.8% to P9.99 billion with revenue generated from gold reached P5.43 billion, lower than P6.21 billion in 2016 despite the its price increase to $1,273 per ounce.

Copper revenue was slightly up by 12.55% to P4.48 billion from 2016’s P3.98 billion due to the slight increase of average copper prices. Revenue generated from silver was down to P77.2 million from 2016’s P86.5 million.

“While overall output was lower for the year, the last four months of 2017 showed a 15% improvement in tonnage compared with the average in the first eight months due to engineering interventions and additional manpower,” the company said.

“These measures partially addressed the issues that affected production from January to August 2017.”

Last year’s metal output was dragged down by bouldery ore, lower ore grades and other production-related issues, falling to 7.673 million tons from 2016’s 9.359 million tons.

Ore grades for gold last year were at 0.377 grams per ton (g/t) from 2016’s 0.427 g/t. Likewise, copper dropped to 0.192% from 2016’s 0.206%.

Gold output dropped to 84,638 ounces from 2016’s 103,304 ounces while copper also fell to 30.1 million pounds from 35 million pounds last year.

Philex’s consolidated costs and expenses dropped to P6.78 billion from last year’s P6.9 billion due to a 16% decline in the cost of power, contracts, and other expenses.

Its parent company paid P705.2 million in bank loans last year, bringing its short-term debt to P2.45 billion.

Philex also contributed P1.56 billion in taxes, royalties, social development management programs and other fees while committing to countryside development in its areas of operation.

In the same statement, Philex declared a P0.04 per share cash divided while its 2017 divided was at P0.08 per share, higher than last year’s P0.07 per share.

The company’s shares on Wednesday closed P0.180 or 2.98% higher at P6.22 than Tuesday’s P6.04. — Anna Gabriela A. Mogato

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