By Krista Angela M. Montealegre
National Correspondent

THE COUNTRY’s biggest conglomerates turned in mixed reported earnings results in the second quarter, dragged by the absence of non-recurring items from asset sales and trading gains of the banking business that inflated profits a year ago, according to separate disclosures to the stock exchange on Friday.

Results in the April-June period showed Ayala Corp. registering a marginal increase in its net profit and DMCI Holdings, Inc. growing its bottom line by seven percent.

In contrast, GT Capital Holdings, Inc. and LT Group, Inc. reported lower earnings in the three-month period.

JG Summit Holdings, Inc. did not include its second-quarter results in its disclosure, but first-half earnings trekked lower.

“It’s a mixed bag though, generally, some were a little below expectations,” Luis A. Limlingan, business development head at Regina Capital Development Corp., said in mobile phone message.

“The earnings reports aren’t really moving the market,” Miko A. Sayo, trader at AP Securities, said in a separate interview.

Ayala, the country’s oldest conglomerate, penciled an annual two percent growth in second-quarter earnings to P8.1 billion, as higher securities trading gains recognized by Bank of the Philippine Islands in the previous year tempered profitability.

In the first half, Ayala’s net income rose nine percent to P15.1 billion year-on-year, driven by the strong contributions of its real estate and power generation businesses.

“We are pleased with the overall strong of our businesses. The active portfolio management, new business initiatives, and financial discipline we employed in recent years — supported by a healthy domestic economy- continue to bolster Ayala’s growth trajectory,” Ayala President and Chief Operating Officer Fernando Zobel de Ayala was quoted in the statement as saying.

The holding company owned by billionaire David M. Consunji grew its net profit by seven percent to P3.65 billion from P3.4 billion last quarter, pushing the first-semester figure by 21% to P7.6 billion from P6.3 billion powered by its power, real estate and construction businesses.

After taking into account a one-time gain of P111 million from the partial divestment of its stake in Subic Water and Sewerage Co. in March 2016, DMCI Holdings’ core earnings improved by 19% to P7.6 billion in the six-month period from P6.4 billion.

“We had a very good first half. Our performance in the second half will likely be more modest due to the higher strip ratio of SMPC compared to the first half,” DMCI Holdings Chairman and President Isidro A. Consunji said in a statement.

GT Capital, the holding firm for the business empire of tycoon George S.K. Ty, reported that consolidated net income attributable to equity holders of the parent company dropped by a third to P4.14 billion in the second quarter from P6.16 billion.

In the first semester, consolidated net income attributable to equity holders of the parent company fell 21% to P7.24 billion from P9.11 billion in the same period a year ago.

Earnings last year got a boost from non-recurring gains due to the sale of Global Business Power Corp. to Beacon Powergen Holdings, Inc., an affiliate of Metro Pacific Investments Corp. (MPIC), and Charter Ping An Insurance Corp. in the amount of P3.2 billion.

Core net income rose 19% to P7.4 billion in the first six months of 2017 from P6.2 billion driven by the record car sales of Toyota Motor Philippines Corp., double-digit growth in the property business composed of Federal Land, Inc. and Property Company of Friends, Inc. and higher equity in net income of associates.

“GT Capital’s first-half 2017 financial results are in line with expectations due to the healthy contributions from our core businesses,” GT Capital President Carmelo Maria Luza Bautista said in a statement.

“The sustained strength of the domestic economy for the first six months of 2017 reinforced our company’s solid performance. We look forward to the rest of the year with optimism as our component companies continue to be on track with their growth and expansion objectives.”

LT Group’s attributable net income slipped two percent to P2.28 billion in the second quarter from P2.33 billion a year ago.

As a result, first-semester earnings was flat at P4.53 billion, as Philippine National Bank’s earnings slid 38% from a year ago which included a P1.48-billion gain from the sale of real properties.

Meanwhile, Gokongwei-led JG Summit saw a 16.5% decrease in consolidated net income for equity holders of the parent to P14.64 billion in the first half from P15.99 billion after booking mark-to-market hedging losses and rising fuel prices hit its airline business.

Excluding non-operating and non-recurring items, JG Summit’s core net income was flat at P15.95 billion.

GROSS domestic product (GDP) growth likely raced to 6.8% last quarter, Moody’s Analytics said on Friday, baring an estimate that — if realized — would put its full-year projection for the Philippines and that of the government within reach.

Friday also saw Citi Research signaling separately that the lower end of the government’s 6.5-7.5% economic growth goal for this year can be achieved.

The Moody’s estimate is faster than the first three months’ actual 6.4% but would be slower than the second-quarter 2016’s 7.0%.

But it would still put the first-half pace on firm footing to enable the year to hit Moody’s 6.5% projection and the government’s own target for the entire 2017.

The Philippines Statistics Authority is scheduled to report second-quarter and first-half GDP data on Aug. 17, and Socioeconomic Planning Secretary Ernesto M. Pernia has said the pace was likely faster than the first quarter’s but slower than that of April-June 2016.

“Philippine GDP growth likely accelerated to 6.8% y/y in the second quarter, compared with 6.4% in the opening three months of the year,” Moody’s said in the Aug. 14-18 Asia-Pacific Economic Preview it e-mailed to journalists on Friday.

“The main boost will come from exports, which have been expanding rapidly in recent months largely because of stronger shipments of electronics.”

Moody’s released the note a day after the government reported that merchandise exports grew for the seventh straight month in June, though at the slowest pace — just 0.8% year-on-year to $4.913 billion — within that period.

June brought first-half merchandise export sales to $31.04 billion, up 13.6% from $27.33 billion in 2016’s comparable six months and surpassing the government’s five percent growth projection for 2017.

Moody’s on Friday also said that “domestic factors have remained conducive to strong growth”, noting that ‘… [p]rivate consumption will grow rapidly for the foreseeable future, thanks to rising incomes and favorable demographics”, while “… [i]nvestment will also expand rapidly as a result of a mixture of private and government projects”.

Sister company Moody’s Investors Service in late June affirmed the country’s “Baa2” credit rating — a notch higher than minimum investment grade — and kept the outlook for this score “stable”, or unlikely to change over the next two years.

“The Philippines’ Baa2 rating reflects high economic strength that balances the country’s large scale and rapid growth against low per capita income relative to peers,” Moody’s Investors Service had said then.

“Our assessment of its institutional strength incorporates a long track record of sustaining macroeconomic and financial stability, despite weaker Worldwide Governance Indicators as compared to other investment grade countries.”

It also said then that it expected Philippine GDP “growth to be sustained at above six percent per year over the next two years, driven largely by the private sector.”

‘DOING… VERY, VERY WELL’
Citi Research on Friday separately gave a downgraded 6.5% projection for 2017, also within the government’s full-year target, and a 6.6% forecast for 2018 against the government’s 7-8% projection for that year.

Citing the petering out of the boost provided last year by spending related to the May 2016 national elections, Citi Head of Asian Emerging Markets, Economics and Strategy Johanna Chua told reporters in a briefing in Makati City that the Philippine economy is on a “slowdown trajectory from last year but we are still stabilizing at a pretty decent growth rate”.

“And we have to remember by Asia standards, for this year, the only countries that we expect to grow faster than the Philippines… is India and China.”

Asia itself is expected to grow by 6.1% this year from 2016’s 5.9%, before slowing to 6.0% in 2018, while global economic expansion is projected to clock 3.1% and 3.3%, respectively, for the same years.

Inflation, Citi Research said, will be generally supportive of growth, staying within the government’s 2-4% target range for the next two years. It forecasts the overall year-on-year increase of prices of widely used goods and services at 3.1% and 3.4% in 2017 and 2018, respectively, against the central bank’s own updated forecast full-year average of 3.2% for this year and 2018.

“By regional standards we are still doing well, very, very well.”

But while the Bangko Sentral ng Pilipinas (BSP) on Thursday kept monetary policy steady for the 23^rd straight Monetary Board meeting, or since September 2014, Citi Research said it now expected the BSP to hike policy rates — now at 3.5% for overnight lending, 3.0% for the overnight reverse repurchase rate and 2.5% for overnight deposit rate — by three to four times in 2018, as the Federal Reserve raises US rates three times in the same year.

The Fed ended close to a decade of near-zero policy rates by raising them by 25 basis point in December 2015, following that move with increases of the same magnitude in December 2016, as well as in March and June. — with a report from Janine Marie D. Soliman