Which economies are business leaders most optimistic about?

May 1, 2018 | 3:00 am

Business optimism weakens in Q1

May 1, 2018 | 1:00 am

BUSINESS OPTIMISM in the Philippines weakened sharply in the first quarter of 2018, according to global research firm Grant Thornton’s International Business Report (IBR), which attributed this to a drop in employment and profitability expectations.
A summary of IBR findings showed Philippine business leaders’ overall optimism (total optimistic less total pessimistic) stood at 74% in the first quarter of 2018 — down from the preceding three month’s 86%, and 24 points less than the all-time high of 98% recorded in the first quarter of 2017.
Grant Thornton described the more than 2,500 respondents worldwide as chief executive officers, managing directors, chairmen or other senior executives from across industries.

The bleak outlook for the Philippine economy over the next 12 months can be attributed to the decrease in employment expectations to 52% from 66% in the previous quarter, lower investments in plant and machinery to 40% from 54%, slide in investment in technology to 50% from 62%, and drop in profitability expectations to 76% from 86%.
Despite the weakness, the latest quarterly survey puts the Philippines third in the rankings among Asian countries where the regional average is 52% and the Southeast Asian average is 61%.
“Both regulations & red tape (down 12 percentage points) and information & communications technology infrastructure (also down 12pp) are less seen as hurdles to doing business in the country. Businesses expect an increase in their selling prices (up 10pp) as well. Lastly, energy costs and transport infrastructure (both down 8pp) are also seen as less of a constraint to conducting business. As a result, more than half of the businesses surveyed foresee an increased investment in marketing efforts, as well as in sales force effectiveness,” Grant Thornton said.
ASIA PACIFIC
The IBR also found a dip in business optimism across Asia Pacific in the first quarter to 52% from 58%, bucking the wider global trend that saw Asia Pacific and Latin America as the only major regions to see optimism fall over this period.
Globally, business optimism improved to 61% — the highest figure recorded in 15 years of research — from 58% in the previous quarter.
“The drop in optimism across Asia Pacific contrasts with most other global regions. It is striking that the major contributors to this dip are China and Japan. That said, their confidence levels still compare favorably with those in recent years,” Ma. Victoria C. Españo, chairperson and chief executive of P&A Grant Thornton, said in the statement.
In China, business optimism slid to 65% in the first quarter from an all-time high of 78% in the fourth quarter of 2017. In Japan, business optimism stood at -8% after recovering to 3% in the preceding three months following nine consecutive quarters in negative territory.
“A talking point for the whole region, though, is the rhetoric around import taxes with the US ratcheting up. It will be telling to see how businesses respond over the next quarter. Most take the view that the risk of a fully blown ‘trade war’ has eased, but uncertainty is never welcome. Most business leaders will want to see clarity sooner rather than later,” Ms. Españo said.
Across Southeast Asia, economic optimism is up to 61% in the first three months — the joint highest quarterly figure ever recorded according to Grant Thornton — on the back of substantial increases in optimism in Malaysia (up 22 points), Singapore (up 12 points), and Thailand (up 6 points).
“The dip in optimism in China and Japan hardly represents confidence in free fall. However, how the region responds will be telling. ASEAN businesses are currently optimistic, but if they see the war of words on trade develop between China and the US, that confidence could start to evaporate,” Ms. Españo said. — Krista Angela M. Montealegre

BSP sees inflation pickup in April

May 1, 2018 | 12:32 am

THE BANGKO SENTRAL ng Pilipinas (BSP) expects inflation to have picked up further in April to hit a new peak, with price movements driven by rising oil and power rates.
The BSP’s Department of Economic Research gave a 3.9-4.7% forecast range for headline inflation last month. This is “slightly” higher than the 3.8-4.6% estimate given for March, which clocked in at 4.3% using 2012 prices, with the higher end of April’s forecast range again well beyond the government’s 2-4% target.
The BSP’s forecast range also includes the 4.5% median estimate from a BusinessWorld poll among economists, which if realized will be higher than the 4.3% actual rate in March and 3.2% in April 2017.
The Philippine Statistics Authority will report the latest inflation data on Friday.
“Geopolitical tensions in the Middle East caused a sharp increase in international oil prices spilling over to higher domestic petroleum prices for the month,” the central bank said in a statement yesterday.
“In addition, higher electricity rates in Meralco-serviced areas as well as higher rice prices due to supply conditions could contribute to additional price pressures.”
World crude prices hit three-year highs in April amid renewed tensions in the oil-rich Middle East, which pushed up retail pump prices here. Year-to-date, gasoline prices have increased by P3.45 per liter while diesel costs are up by P4.55 per liter, according to the Department of Energy.
Rice prices also maintained their ascent for the third straight month due to short supply, according to the National Food Authority.
Power distributor Manila Electric Co. likewise announced a 22.5-centavo increase per kilowatt-hour for April’s utility bills due to a higher generation charge.
Headline inflation averaged 3.8% as of end-March, just a tad below the 3.9% expected by the BSP for the full year and close to breaching the 2-4% target band.
Analysts expect price increases to accelerate further this month, as the impact of a weaker exchange rate and higher taxes add to upward pressures. Several economists are even pricing in a rate hike from the BSP Monetary Board’s May 10 policy review, saying that such a move will keep borrowing rates competitive at a time of faster inflation.
“The BSP will continue to monitor closely evolving inflation dynamics over the policy horizon against any signs of incipient price pressures that may warrant a policy response,” the central bank said on Monday.
BSP Governor Nestor A. Espenilla, Jr. has said the monetary authority is prepared to “take immediate and appropriate measures” should inflation cover more goods, as he finds comfort in knowing that the local economy can weather the impact of higher interest rates if needed.
Some analysts have pointed out that Mr. Espenilla has taken a more hawkish tone recently compared to his previous remarks, while others say that robust domestic economic activity and upbeat first-quarter growth prospects could allow the BSP to stay on hold for now. — Melissa Luz T. Lopez

Money supply growth picks up pace in March, hits 5-month peak

May 1, 2018 | 12:31 am

By Melissa Luz T. Lopez
Senior Reporter
MONEY SUPPLY expanded faster in March to a five-month peak even as growth in bank lending slowed, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
More money circulated in the domestic economy as liquidity grew by 14.4% from a year ago, picking up from the 13.5% pace logged in February and logging the fastest rate seen since October 2017.
Domestic liquidity or M3, which stands as the broadest measure of money in an economy, reached P10.9 trillion as of end-March. Month on month, money supply actually increased by 1.3%.
Funds from local sources went up by 14.2% for the month, faster than the 13.8% logged in February supported by a sustained rise in bank credit, the central bank said in a statement.
Net claims on the central government also posted a 6.5% rise, compared to a 3.7% increase the previous month due to increased borrowings made by the state.
The government issued $230 million worth of renminbi-denominated papers during its maiden issuance of the so-called panda bonds on March 20.
On the other hand, net foreign assets expressed in peso terms posted faster growth at 6.4% versus the 4.6% clocked in February. A steady stream of dollar inflows from overseas Filipinos’ remittances, business process outsourcing revenues, and foreign portfolio investments supported a stronger position maintained by the BSP.
Foreign assets held by banks also rose on the back of higher investments in debt papers, the central bank added.
“The overall pace of growth in M3 remains consistent with the BSP’s prevailing outlook for inflation and economic activity,” the BSP said in a statement.
CREDIT GROWTH EASES
On the flip side, bank lending eased in March to log the slowest pace in over a year.
Credit growth slowed to an 18.3% rise for the month coming from February’s 19.5%, the central bank said, posting the weakest increase since February 2017.
Factoring in the reverse repurchase agreements availed by banks, lending went up by 18.8% coming from 17.6% a month prior.
Majority of the loans went to fund production activities to account for 88.4% of the total. These credit lines grew by 18.1% in March from 18.6% previously, with the biggest increase in lending extended to other community, social and personal activities which jumped by 83.1%.
Other sectors which received bigger loan lines include information and communication (27.9%); electricity, gas, steam and airconditioning supply (23.7%); real estate activities (18.6%); wholesale and retail trade, repair of motor vehicles and motorcycles (17.6%); and financial and insurance activities (17.1%).
Other sectors received bigger credit except for administrative and support services, which saw borrowings plummet by 37.9%, and the agriculture sector with an eight percent drop in lending, according to BSP data.
Consumer lending also softened in March as retail lines grew by 19.3%, slower than the 19.9% climb in February on the back of declines in some household loans and slower increases in motor vehicle and salary-based borrowings, the central bank said.
The central bank monitors liquidity and bank lending dynamics to ensure price and financial stability, as several observers have flagged potential overheating in the economy due to rapid loan growth.
Central bank officials have said that the rapid loan growth seen in the local scene simply supports more upbeat domestic economic activity, particularly with the government’s infrastructure spending push.

PEZA tries to soothe investors spooked by tax

May 1, 2018 | 12:30 am

THE WOMAN tasked to lure investment to Philippine economic zones is seeking to calm investors spooked by a government proposal to scale back tax incentives.
The Finance department plans to take away tax breaks given to businesses, valued at over P300 billion ($5.8 billion) a year or about two percent of gross domestic product.
Charito Plaza, head of the agency which oversees hundreds of industrial parks, is confident officials will apply tax changes only to new investment.
“Don’t be afraid,” Plaza, director general of the Philippine Economic Zone Authority, said in an interview at her office in Manila. “The government won’t renege on contracts.”
The Philippines is in the midst of an ambitious tax reform to raise revenue to help pay for a $180-billion infrastructure plan. But a part of the proposal to cut income tax holidays and duty-free imports is causing some companies to put expansion plans on hold. A newspaper report showed PEZA investment pledges fell 22% from a year earlier in the first two months of 2018.
“It’s certainly the case now that some are putting their business plans on hold,” said Guenter Taus, president of the European Chamber of Commerce in the Philippines, whose about 800 members are mostly in outsourcing and manufacturing. “I don’t see a very, very rosy picture in the future.”
While foreign direct investment surged to a record $10 billion last year, the United Nations ranks the Philippines behind major Southeast Asian economies in terms of investment.
Balancing efforts to boost revenue and attracting investment is a tough task. Former President Benigno Aquino III also mulled dialing back on incentives but disagreements on which sectors they’ll take perks away from ended in a stalemate.
Plaza is fighting hard. At a meeting with policy makers, Plaza went armed with data showing industries located in these economic hubs contributed about P3.3 trillion annually to the economy, trumping the estimated foregone taxes.
“We have to look at the total picture,” said Plaza, a former lawmaker who co-authored the bill creating the economic zone authority. “There’s also the social progress that cannot be quantified.”
Policy makers are also now looking at making incentives for new investors performance-based and targeted to basic industries like steel and agriculture, she said.
“Industries are the goose that lays the golden egg,” Plaza said. “We won’t kill the goose.” — Bloomberg

Filipino action film The Trigonal to premiere at Cannes Film Market

May 1, 2018 | 12:09 am

A FILIPINO action-thriller meant to make “action movies alive and palatable again to local and international audiences,” is set to make its world premiere at the Cannes Marche du Film (Cannes Film Market) of the Cannes Film Festival this month.
The Trigonal, directed by Vincent Soberano, is about a mixed martial arts athlete who returns to his hometown and becomes a drug lord’s pawn — along with his wife and unborn child — and has to compete in an underground fight club.
Leading the cast are theater actor Ian Ignacio (who has a black belt in Taekwondo) and film/TV actress Rhian Ramos.
The film is said to “combine meticulously choreographed action sequences with top-notch production details, and at the very heart of it, a journey in humanity,” according to a press release.
“I wanted to make a movie that combines a love story with a thriller, some comedy, and a whole lot of mixed martial arts action never before seen on screen. The movie abounds with symbolism. The ‘Trigonal’ refers to an underground fighting arena shaped like a triangle. It also represents the film’s three principal characters and three subplots. The triangle in itself is a symbol of mixed martial arts,” said Mr. Soberano in the release.
“The action has to tell a story and a good actor can intensify or downplay the action depending on their portrayal of it,” he explained before adding, “Fight porn is what I call fighting just for the sake of fighting. I don’t like that. There has to be a story behind every action, every kick, every punch.”
The Trigonal is set to have its world premiere at the Cannes Film Market on May 12.
The Cannes Film Market is held in conjunction with the Cannes Film Festival which runs from May 8 to 19.
The film — which also stars several Chinese artists including Ultimate Fighting Championship star Li Jing Liang, actor/producer Gus Liem and Chinese-American action star Sarah Chang — was picked up for Chinese distribution by Real Pictures Entertainment after the film’s limited release premiere here on March 14, while the Philippine distribution will be handled by Viva Pictures. The film is set to be shown in Philippine cinemas in July.
Talks are underway to bring the films to the US in August, said the statement. — Zsarlene B. Chua

Avengers opens with $630M, smashing the global record

May 1, 2018 | 12:08 am

LOS ANGELES — Avengers: Infinity War took in $630 million in its first weekend, the highest global opening of all time, industry estimates showed on Sunday.
“The latest Marvel juggernaut… opened with $630M worldwide, making it the largest global weekend tally in the history of film, and this was done without China,” which has a later opening, industry tracker Exhibitor Relations said.
That topped The Fate of the Furious, the eighth installment of the high-octane action series starring Vin Diesel, Dwayne Johnson, and Michelle Rodriguez that opened with more than $530 million globally in 2017.
Infinity War, which features more than two dozen superheroes fighting to save the universe, also broke the record for highest North American opening weekend, raking in $250 million at US and Canadian box offices.
That beat The Force Awakens, the seventh film in the long-running Star Wars space saga that made $248 million in its opening weekend in 2015.
SAVING THE UNIVERSE
Infinity War is the 19^th film in the so-called Marvel Cinematic Universe (MCU), combining a whopping nine franchises and a cast list that reads like a who’s who of Hollywood’s A-list.
Robert Downey, Jr. dons the red and gold metal suit once again as Iron Man; Benedict Cumberbatch is Doctor Strange; Scarlett Johansson is back as Black Widow; and Australia’s Chris Hemsworth is Thor.
Also back for more?
Black Panther — the Marvel breakout of the year after the standalone pic’s massive opening in February, Captain America, the Hulk, Spider-Man, Hawkeye, the Guardians of the Galaxy and their assorted allies.
“We took a picture of every single person whose character has been in the MCU. We hung it up on a wall all around us,” co-director Anthony Russo, who helms the film with his brother Joe, told reporters ahead of its release.
“We basically spent months and months and months talking about where we could go with each character, how we could draw them through the story,” he added.
“Every one of these characters… has been on a very specific journey through the MCU to arrive at this moment.”
“It is an extraordinary weekend for the movie business and for the Marvel Cinematic Universe,” Dave Hollis, head of domestic distribution at Disney, said. “Infinity War was the culmination of 10 years of developing the universe and characters that people care about. Having them all come together in this was what created a must-see moviegoing event.”
Prior to Infinity War, the original Avengers had the highest opening to date for a Marvel film, debuting with $207.4 million. Its sequel, Age of Ultron, launched with $191 million. The first movie earned $623 million in North America, while the second made $459 million.
This is the third Avengers film, before the final, untitled saga set for next year.
‘NORTH STAR’
An important source of inspiration is the Marvel canon — the storylines developed over decades in the original comic books.
Infinity War is drawn from the “Infinity Gauntlet” series of the early 1990s.
“It starts with those comics and us beginning to rip pages out or rip copies of pages out and put them on the walls and start to be inspired,” explains Kevin Feige, the president of Marvel Studios, which is owned by Disney.
“It’s a North Star for us as we lead these giant productions into reality.”
Joe and Anthony Russo directed from a script by Christopher Markus and Stephen McFeely. Infinity War picks up two years after the events of Captain America: Civil War with the Avengers teaming up with the Guardians of the Galaxy to stop the evil Thanos (Josh Brolin) from inter-galactic dominance.
In the movie’s trailer, Gamora (Zoe Saldana) — Thanos’s daughter, of sorts — explains that the villain believes that if he annihilates half of the universe, he can save the other half.
He needs the so-called Infinity Stones to do it. So, the heroes need to keep him from getting them.
The film cost an eye-watering $300 million to make, according to Hollywood media.
“It was about the most fun creative exercise I think I’ve ever been through in my life,” said Anthony Russo. “We thought about everybody in the MCU.” — AFP/Reuters

Avatar director Cameron traces roots of sci-fi movie explosion

May 1, 2018 | 12:07 am

LOS ANGELES — Avatar director James Cameron’s latest project takes audiences back to the humble beginnings of science fiction movies, long before films like Star Wars sold billions of dollars worth of tickets and dominated popular culture.
In a six-part documentary series that debuts on US cable network AMC on Monday, Cameron explores the B-movies of the 1950s, space and alien films of the 1960s, and post-apocalyptic thrillers of the 1970s.
While many are now considered classics, including Stanley Kubrick’s 2001: A Space Odyssey from 1968, Cameron said Hollywood executives at the time showed little interest in a genre that rarely yielded big box office returns.
“Nobody had ever made any damn money with science fiction,” Cameron told reporters at the Manhattan Beach, California, studio where he is in the middle of making two Avatar sequels.
Everything changed with 1977’s Star Wars, which became the highest-grossing domestic film in history at the time and sent film studios scrambling to imitate it.
“You had a lot of bad science fiction for a while, all trying to cash in on Star Wars,” Cameron said. “Then the whole genre elevated and became much more what it is today, which is much more a part of the mainstream culture.”
Today, movies grounded in science fiction are among the biggest draws at box offices. Cameron’s Avatar holds the current record for ticket sales with $2.8 billion worldwide.
Last weekend’s Avengers: Infinity War, from Walt Disney Co.’s Marvel Studios, was expected to rank among the top US and Canadian openings of all time. (See story here.)
In the series called AMC Visionaries: James Cameron’s Story of Science Fiction, Cameron interviews fellow directors Steven Spielberg, Guillermo del Toro, George Lucas, Ridley Scott, and Christopher Nolan about filmmaking and their influences.
Cameron traded notes with the directors on their favorite sci-fi literature from as far back as the 1930s, something he wanted to highlight as a key part of the genre’s origins.
“What was important to me for this series was to trace back the DNA of these stories,” Cameron said. “So if you’ve got a time travel story, where did that come from? If you’ve got a space story, how did that enter our popular culture? Why did science fiction as a genre struggle to try and popularize these ideas?”
Cameron argued that science fiction is now more relevant than ever as humans become more dependent on machines.
“We are co-evolving with our own technology,” Cameron said.
“Science fiction is kind of our headlights. It helps us see what’s down the road.” — Reuters

Weinstein ‘believes he will be forgiven’ by Hollywood — Piers Morgan

May 1, 2018 | 12:06 am

LONDON — Movie producer Harvey Weinstein, who has been accused of sexual assault by dozens of women, believes he will eventually be forgiven by Hollywood, according to television presenter Piers Morgan.
Once one of Hollywood’s most powerful figures, Weinstein has been accused by more than 70 women of sexual misconduct, including rape.
Weinstein has denied having non-consensual sex with anyone.
Morgan told GQ magazine he had spoken to Weinstein at a clinic where he has been seeking treatment.
“I’ve spoken to Harvey in the clinic in Arizona, for about an hour. He’s fighting,” Morgan said.
“He’s a fascinating character. The apocalyptic symptom of the whole thing — the casting couch finally brought to judgment.”
Morgan said he was not as surprised by some of the allegations.
“Listen, this has been the system since Hollywood existed,” Morgan said.
“It’s been a moral cesspit since the ’20s, and the idea that Harvey Weinstein is the only villain? Do me a favor.
“Look at Mel Gibson: ultimately Harvey believes he will be forgiven.”
Gibson sparked controversy in 2006 after unleashing an anti-Semitic tirade during his 2006 arrest for drunk driving, but has enjoyed recent success and was awarded a best director nomination for his film Hacksaw Ridge in 2017.
Weinstein said in a statement that he spoke with Morgan last year.
“I have immense respect for Piers Morgan and appreciate him. During our conversation, which was back in 2017, the only thought I conveyed was that my focus now and in the future is on my family,” Weinstein said.
“I did not talk about business or Hollywood. My priority is my family.”
The full GQ interview will be published on May 3. — Reuters

Pangilinan eyes resumption of talks with CNOOC

May 1, 2018 | 12:06 am

By Victor V. Saulon, Sub-Editor
PXP ENERGY Corp. sent feelers to China National Offshore Oil Corp. (CNOOC) for a possible resumption of talks about jointly exploring the contested area in the South China Sea or the West Philippine Sea, the chairman of the local company said on Monday.
“I believe we have sent feelers to CNOOC to see whether we could meet with them again as soon as they are available to talk about the South China Sea situation. Of course, anything with them will have to be cleared with our government. I’m sure it’s true for their side as well,” PXP Chairman Manuel V. Pangilinan told reporters on the sidelines of the quarterly briefing of Manila Electric Co., a company he also chairs.
Asked if the feelers were sent recently, he replied: “Not this year.”
Mr. Pangilinan said there had been some suggestions on the legal framework for the Philippines and China on joint exploration, and that the local group had hired legal experts to clarify the sovereignty issue and to help come up with a “legal structure.”
“I think there have been some suggestions. We have engaged both local lawyers… and international lawyers to help us craft a legal structure that obviously will meet the test of sovereignty of the Philippine government and what these lawyers think might be acceptable to the Chinese government,” Mr. Pangilinan
PXP Energy directly and indirectly owns 77.5% of Forum Energy Ltd., a London-listed company whose main asset is a controlling interest in offshore exploration Service Contract (SC) 72 west of Palawan island in the disputed seas. SC 72 is covered by the decision handed down by the Permanent Court of Arbitration in The Hague in the Netherlands on July 12, 2016.
The court ruled that Reed Bank, where SC 72 lies, is within the Philippines’ exclusive economic zone as defined under United Nations Convention on the Law of the Sea.
On March 2, 2015, the Department of Energy (DoE) placed SC 72 under force majeure because the contract area falls within the disputed area, which was the subject of the arbitration process.
Under the terms of the force majeure, exploration work at SC 72 is suspended from Dec. 15, 2014 until the DoE notifies Forum Energy that it may continue drilling.
Mr. Pangilinan said the Philippine government had not set a timeframe for coming up the legal structure.
“I think a great deal of it will depend on the timeframe by which the Philippine government and the government could agree a protocol, a code of conduct for the joint or cooperative surveys, development etcetera of the South China Sea,” he said.
Mr. Pangilinan said PXP Energy and CNOOC had been waiting for the two governments “to sort things out between the two of them,” although they appeared to be “moving positively in arriving at something.”
“From what we gathered, it’s a positive development,” he said, citing the recent visit of President Rodrigo R. Duterte to China to attend an economic forum, during which he met with Xi Jinping, China’s president.
Mr. Pangilinan also said the recent pronouncement of Mr. Duterte favoring a 60-40 sharing of the gas find in the area would be the government’s call.
“But at the end of the day, the proportion of sharing are numbers that the government will tell us what’s acceptable to them,” he said.
“If he’s happy with 60-40 then we’ll take it as marching orders,” he added.

TV’s Single/Single grows up in new film

May 1, 2018 | 12:05 am

EVERYBODY HAS to grow up someday, and the cast of Single/Single, the TV series by Cinema One and The Philippine Star which was first shown in 2016 will now have to make the transition from the small to the big screen for the movie Single/Single: Love Is Not Enough.
The TV series opened with the premise of Joey and Joee (played respectively by Matteo Guidicelli and Shaina Magdayao) moving in together as roommates, and while it was all fun and games at first, romantic feelings developed between them. By the end of the second season, Joee has become pregnant by Steve (JC Santos), and the movie, picking up from this cliffhanger, begins with Joee giving birth, making Joey a reluctant foster father.
“Even if you didn’t see the series, you’ll understand the story,” said head writer for the series and movie Lilit Reyes.
“Itong movie…is one big leap, or three steps higher, because we are not just [learning] #HowToAdult. This time, dahil magkakaroon na ako ng anak, #Adulting na talaga siya (This movie is one big leap, or three steps higher, because we are not just learning #HowToAdult. This time, because I’m having a child, it’s really about #Adulting),” said one of the film’s stars, Ms. Magdayao.
“Kung dati, hinahanap lang namin ’yung pagkatao namin, ’yung hobbies namin, kung anong gusto namin sa buhay, ngayon, paano namin pananagutan itong malaking responsibilidad na ito (Before, we were just looking for ourselves, our hobbies, and what we want out of life. Now, how do figure out how we can take responsibility for this big task)?”
According to Lucien Dy Tioco, executive vice-president of the Philstar Media Group, “Kami actually nag-pitch ng idea to Cinema One (We actually pitched the idea to Cinema One). We wanted a co-production with them. It was hitched actually on the advocacy of financial literacy.”
Single/Single: Love Is Not Enough will hit cinemas on May 2.
The movie is directed by Veronica Velasco and Pablo Biglang-awa, and is co-written by Jinky Laurel. It stars Matteo Guidicelli, Shaina Magdayao, Cherie Gil, Ricky Davao, Anna Luna, Brian Sy, and JC Santos.
BusinessWorld is part of the Philippine Star Group. — Joseph L. Garcia

Meralco Q1 profit rises 10% due to ‘unusually’ strong energy sales

May 1, 2018 | 12:05 am

MANILA ELECTRIC Co. (Meralco), the country’s biggest power distribution utility, posted a net income of P5.31 billion in the first quarter, up 10% from the same period last year, largely because of higher energy sales.
Adjusted for one-time, exceptional transactions, core net income at P4.92 billion was higher by 6.9% from a year ago.
“We were quite surprised by the unusually strong sales that we saw in the first quarter, particularly in March,” said Oscar S. Reyes, Meralco president and chief executive officer, during the company’s quarterly financial briefing.
Meralco Chairman Manuel V. Pangilinan described the quarterly performance as possibly resulting in a “better year” for the distribution utility.
Energy sales in the first quarter went up nearly 9% to 10,145 gigawatt-hours (GWh), even as average distribution rate was a centavo lower at P1.40 per kilowatt-hour (kWh).
Also contributing to the higher profit during the period was the flat operating and maintenance expenses and adjustment of provisions for impairment of certain trade receivables, said Betty C. Siy-Yap, Meralco senior vice-president and chief finance officer.
Consolidated revenues for the first three months reached P70.81 billion, up 6.4% compared with the same period last year. Electricity revenues accounted for the bulk at P69.01 billion, higher by 6.6% from a year ago.
Mr. Reyes said industrial customers recorded the biggest growth in terms of power consumption at 11% to 3,014 GWh. Residential customers followed with a 9% increase to 2,997 GWH, while the commercial segment posted an 8% increase to 3,979 GWh.
He said commercial sales volume were still driven by the real estate, retail trade, and hotel and restaurant business.
Real estate and retail trade had been supported by the mixed-use developments to meet the strong demand for residential and commercial spaces for the business process outsourcing sector and offshore gaming operations. Operations of hotels that opened last year continue to ramp up and normalize in 2018.
The rise in industrial sales volume had been largely spurred by the semiconductor, food and beverage, and rubber and plastics industries.
Mr. Reyes reported that Meralco’s customer base as of the third quarter increased by nearly 5% to 6.4 million, of which 290,000 are net new accounts since March 2017.
The residential customer base, which increased by 5% represented 92% of Meralco’s customer base. The figure includes 93,522 prepaid electricity customers, up from 49,825 as of end-March 2017.
“Our first quarter billed volume growth of 9% is encouraging and indicative of continuing strong economic growth. Domestic consumption and investment expenditures remain rather strong; the prospect of regional stability with the recent developments in North and South Korea and the friendly tone in Philippine-China relations add to this positive view,” Mr. Pangilinan said in a statement distributed during the briefing.
On Monday, shares in Meralco rose by 2.48% to close at P322 each. — Victor V. Saulon

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