Philippine economy grows less expected than on weaker consumer spending

May 9, 2024 | 12:07 pm

Makati city-skyline — SEAN YORO-UNSPLASH

MANILA – The Philippine economy accelerated less than expected in the first quarter, government data showed on Thursday, as weaker consumer spending offset a rebound in export growth.

Gross domestic product grew 5.7% in the first three months from the same period last year, the statistics agency said, up from the previous quarter’s 5.5% but below the 5.9% forecast in a Reuters poll.

The Southeast Asian nation’s government remains optimistic about growth, Economic Planning Secretary Arsenio Balisacan said, including the strong rebound in exports fueled by a recovery in shipments of electronic products.

“Despite our challenges on both domestic and international fronts, our economy continues to demonstrate remarkable resilience and growth,” Mr. Balisacan told a press conference. “We are in good shape.”

He expressed confidence the economy can hit the government’s 6.0%-7.0% full-year growth target. The government cut the target range last month from December’s 6.5%-7.5% projection due to high inflation and an anticipated global slowdown.

Inflation continues to dampen domestic demand, which grew 4.6% in the first quarter, the weakest since a 4.8% contraction in the first quarter of 2021.

On a seasonally adjusted basis, economic growth slowed to 1.3% from 2.1% in the previous three months, although this was above the 1.0% growth forecast in the Reuters poll.

Exports rose 9.5% from a year earlier, the fastest since the fourth quarter of 2022. – Reuters

Australia backs long-term gas drilling despite 2050 climate goals

May 9, 2024 | 12:05 pm

STOCK PHOTO | Image by Rebecca Lintz from Pixabay

SYDNEY – Australia’s Labor government on Thursday laid out a strategy to boost natural gas development even as it remains committed to net zero carbon emissions by 2050, highlighting demand from key Asian trade partners.

Australia is one of the world’s largest exporters of liquefied natural gas (LNG), and Resources Minister Madeline King said gas would be needed “through to 2050 and beyond” in the global shift to cleaner energy.

“It is clear we will need continued exploration, investment and development in the sector to support the path to net zero for Australia and for our export partners, and to avoid a shortfall in gas supplies,” she said, launching the government’s Future Gas Strategy.

Australia supplied around a fifth of global LNG shipped last year, with the largest projects run by Chevron CVX.N and Woodside Energy Group WDS.AX in Western Australia, with its biggest customers in China, Japan and South Korea.

The center-left government came up with the new strategy after facing criticism for a range of short term measures it took to boost domestic gas supply and drive down soaring energy prices in 2022 in the wake of Russia’s war on Ukraine.

The plan lays out ways to reduce Australia’s emissions, such as leasing more offshore acreage for carbon capture and storage, while encouraging development of new gas fields, including tightening “use it or lose it” provisions on existing leases.

It comes as Woodside and Santos battle environmentalists opposing gas projects they are developing off northwestern Australia, while smaller companies face opponents to shale gas drilling in the Northern Territory.

“The strategy also makes it clear that we can’t rely on past investments to get us through the next decades, as existing fields deplete,” King said in a column in the Australian Financial Review on Thursday.

“That will mean a continued commitment to exploration, and an openness to the kinds of foreign investment that have helped build the industry into the powerhouse it is today.”

The announcement was welcomed by energy producers but criticized by renewable energy advocates and environmentalists.

“The Future Gas Strategy announced today promotes a reckless plan to open up new industrial gas basins that will damage land, water and communities,” Carmel Flint, national coordinator at environmental group Lock the Gate, said in a statement. – Reuters

South Korea’s Yoon takes responsibility for missteps after 2 yrs in office

May 9, 2024 | 12:04 pm

Korea-Yoon Suk-yeol — South Korean President Yoon Suk-yeol. — REUTERS

SEOUL – South Korean President Yoon Suk Yeol said on Thursday his government’s efforts to improve people’s lives had fallen short, conceding a crushing election defeat for his ruling party last month reflected voters’ assessment of his two years in office.

As part of a major policy push, Yoon also said a new government ministry would be created to address the country’s record low birth rate and fast-ageing society.

“We will utilize all available national capabilities to overcome the low birth rate, which can only be said to be a national emergency,” he said in opening remarks delivered from his office, behind a plaque which read “The Buck Stops Here.”

Yoon’s comments in his first news conference in 21 months come after the heavy defeat of his People Power Party in an April 10 vote, which prompted calls for a change in his leadership style and policy direction to salvage a presidency not yet at the halfway point.

“I think it reflects the public’s evaluation of my administration’s work is far short of what is needed,” Yoon said when asked about his People Power Party’s election defeat.

Yoon, who won the presidency in 2022 by a margin of less than one percentage point, has seen his support ratings plunge to a low of 21% in one public opinion poll.

He has pledged to communicate better with the public and parliament, as some analysts warned that the poll outcome meant he had already slipped into lame duck status.

The president pushed back on opposition parties’ demand for a special prosecutor to investigate alleged improper conduct by the first lady, who was captured in a video that became public in November accepting a pricey bag as a gift in 2022.

While First Lady Kim Keon Hee’s behavior had been unwise, the call by the opposition was a political attack, he said.

The first lady has not been seen in public since Dec. 15, reflecting a view by some analysts and even some members of Yoon’s party that she has become a political liability for the president and his PPP.

The creation of the ministry to address a fast declining and ageing population comes after the country’s fertility rate, already the world’s lowest, continued its dramatic decline in 2023, as women concerned about career advancement and the financial cost of raising children decided to delay childbirth or to not have babies.

The average number of expected babies for a South Korean woman during her reproductive life fell to a record low of 0.72 from 0.78 in 2022, data from Statistics Korea showed.

That is far below the rate of 2.1 per woman needed for a steady population and the rate of 1.24 in 2015 when concerns about issues such as housing and education costs were lower. – Reuters

Viable transition technologies bridge to cleaner, better power generation

May 9, 2024 | 10:30 am

The power industry’s shift to a future with cleaner and better generation technologies require investments in “transition” technologies today to ensure energy security and affordability for present and future generations, an Aboitiz Power Corporation (AboitizPower) official said.

In particular, liquefied natural gas (LNG) is being regarded as a transition fuel to support the entry of more variable renewable energy (RE) and to give time for emerging technologies to be commercially viable.

“New and emerging technologies — energy storage, small modular nuclear reactors (SMRs), and hydrogen — are still expensive today. But our need for energy continues year-on-year and we have retiring old plants, so we really need a lot of new capacity,” said AboitizPower Head of Energy Transition Projects Felino Bernardo. “We will need more LNG-to-power projects, RE capacity, and, at some point in time, we believe that these new and emerging technologies will come in to further accelerate the transition to more decarbonized sources of electricity.”

According to the Philippine Electricity Market Corporation, 51% of the country’s registered capacity is from power plants that are more than 20 years old.

Amidst the impending depletion of the Malampaya gas field by 2027 and the moratorium on greenfield coal-fired power plants, LNG-to-power is considered a cleaner baseload alternative to coal, as it is less greenhouse gas intensive. Gas turbines also cycle more quickly, providing more flexibility when addressing the intermittencies of solar and wind power.

“We need baseload support for RE. It’s not a competition to RE, it’s an enabler for RE to grow,” Bernardo explained.

“Talking about what’s on the other side of the bridge, it’s the new technologies that are coming in. Unfortunately, we need to continue to lengthen and strengthen the bridge because there are still uncertainties on when they’re going to be available and become more affordable,” he added.

The AboitizPower official also maintained that there is no one-size-fits-all solution to an evolving and dynamic process like the energy transition, emphasizing on the necessity of diversifying the energy mix, especially to minimize reliance on one single energy source.

“We’re approaching this with our balanced portfolio strategy. We want affordable electricity that can be provided by coal plants. We want a bridge technology that can be secured by LNG. And we are pursuing our RE targets to support decarbonization. All of these are needed for us to be able to deliver a balanced outcome for the energy needs of the country,” Bernardo said.

The Department of Energy (DOE) projected peak electricity demand to increase annually by 6.6% from 2020 to 2040. This coincides with the Philippine government’s economic growth targets of 6%-7% for 2024, 6.5%-7.5% for 2025, and 6.5%-8% for 2026 to 2028.

In 2022, the primary energy supply mix comprised over 50% net imported coal and oil, and 49% indigenous energy mostly from geothermal, biomass, coal, natural gas, and hydro.

Under the Clean Energy Scenario of the Philippine Energy Plan, it was also forecasted that 50% of gross generation in 2040 will eventually come from indigenous renewable energy sources and 26% will be from LNG.

“LNG is something that we can access. Southeast Asia and North Asia are among the biggest buyers of LNG. A lot of LNG is going this way to our market, so we can access that commodity for energy security,” Bernardo said.

The DOE also said that a capacity of 1,200 megawatts from nuclear power is targeted to take part in the Philippine power mix by 2032.

“With respect to micro modular reactors, it can address specific market needs — powering decentralized grids, data centers, and providing process heat for the industry. For medium-sized SMRs, at 300 megawatts, it’s a good source of baseload energy — dispatchable, safe, and carbon-free,” Bernardo commented. “But we are still a long way from seeing the first-of-a-kind (FOAK) installation and in developing human capability and the supply chain.”

Taking into account the inherent costs and tradeoffs in the energy transition, Bernardo reminded fellow industry players to be very deliberate in their decisions as it will affect the energy security and affordability of present and future generations.

“What does it mean to be energy secure? Simply put, it’s having electricity every time at the right cost and the least harm,” he maintained.

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Yee leads Likha Collab: An all-Filipino natural marketplace launch

May 9, 2024 | 10:00 am

image1-OL — In photo are (from left) Pulse63 Managing Director Abdul Paravengal, Magwai Organics Founder Czar Carbonel, Likha Collab and Pure Essentials Specialist Corp. Founder Pinky T. Yee, Human Nature representative MG Claveria, Isarog Beautanics Founder Trixie Odiamar, Wonderhome Naturals Founder Marvin Chua, and Kaya Founders Managing General Partner and Pulse63 Ventures Founding Partner Paulo Campos.

Pioneering a new era of conscious consumerism, Pinky T. Yee, the visionary behind Pure Essentials Specialist Corp. (PESC), introduced Likha Collab to the public sphere in celebration of Earth Day. This breakthrough e-commerce marketplace is designed to collaborate with Filipino micro, small, and medium-sized enterprises (MSME’s) in showcasing their products to a wider audience.

Partnered with Pulse63, a health-focused business accelerator, Yee conceptualized the marketplace as a vetted space for local entrepreneurs and business owners who champion the cause of sustainability, environmental consciousness, and label transparency, while adhering to regulatory guidelines.

Yee expressed her vision for Likha Collab to emerge as the preferred destination for enthusiasts of natural living and advocates of local businesses. The innovative space, she added, was borne out of her “desire to help bring Earth-friendly Filipino-made brands and to transform every Filipino home to conscious and biodegradable living.”

According to Abdul Paravengal, managing director of Pulse63, Yee’s advocacy towards healthy living and showcasing selected home-grown brands were among the key factors that led them into collaborating with Likha Collab, empowered by their accelerator program.

Yee also underscored the importance of label literacy and consumer awareness. “We vet our partner brands rigorously, ensuring compliance with regulatory bodies, accurate labeling, and of course, the exclusion of harmful ingredients in their products,” she remarked.

In addition to the marketplace, Likha Collab also launched alongside its accompanying Facebook community, Eco Friends PH, to serve as a platform for individuals embarking on their sustainable living journey. The interactive space serves to inspire and facilitate discussions among consumers and like-minded advocates. It also aspires to become an avenue for industry experts from the medical and business sectors to promote awareness and respond to forums.

Among the pioneer brands that joined the mission of Likha Collab are Oryspa, Human Nature, Magwai, Wonderhome Naturals, Pure Culture, and Isarog. Additionally, the marketplace also includes LivClean, First Skincare, and First Botanicals as its house brands.

“We extend an open invitation to local MSMEs to join us in our commitment to provide homes with products that are free from toxic chemicals, safe for all ages, and beneficial for both the family and the planet,” concluded Yee.

Join the movement in making better and responsible choices, and explore Likha Collab’s offerings by visiting www.likhacollab.com.

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JG Summit Holdings, Inc. sets 2024 Annual Meeting of the Stockholders on June 3

May 9, 2024 | 8:00 am

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PHL jobless rate at two-month high

May 9, 2024 | 12:34 am

Job fair-applicants — PHILIPPINE STAR/EDD GUMBAN

By Karis Kasarinlan Paolo D. Mendoza

THE PHILIPPINE jobless rate jumped to a two-month high in March as inflation and an El Niño-induced dry spell limited economic output, according to the local statistics agency.

The national unemployment rate rose to 3.9%, equivalent to two million jobless Filipinos, the Philippine Statistics Authority (PSA) said in a report. The rate was 3.5% in February or 1.8 million jobless people, and 4.7% or 2.42 million a year earlier.

The jobless rate averaged 4% last quarter compared with 4.8% a year earlier.

PSA Undersecretary and National Statistician Claire Dennis S. Mapa blamed lower farm output for increased joblessness.

“The agriculture sector as well as fisheries was heavily affected in terms of employment,” he told a news briefing in mixed English and Filipino. The industry has had to lay off workers as a result.

Inflation, which quickened for the third straight month to 3.8% in April, also restricted production, affecting jobs, Cid L. Terosa, a senior economist at the University of Asia and the Pacific, said in an e-mail.

“The high labor force participation rate as well as seasonal effects related to the hiring practices of firms in the first quarter added upward push to the unemployment rate,” he added.

The job quality in March improved as the underemployment rate eased to 11% from 12.4% a month earlier and from 11.2% a year ago. It was the lowest underemployment rate since September 2023.

Underemployed Filipinos — those who want longer work hours or an additional job — fell by 686,000 to 5.39 million from February. The number of underemployed Filipinos dropped by 51,000 from a year earlier.

Underemployment eased to 12.4% last quarter from 12.7% a year ago.

The PSA said the employment rate fell to 96.1% in March from 96.5% in February. The rate was 95.3% a year earlier.

The number of employed Filipinos rose by 202,000 month on month to 49.15 million in March, compared with 48.58 million a year earlier.

The employment rate rose to 96% in the first quarter from 95.2% a year ago.

The statistics agency noted that month on month, the country’s labor force — made up of people who are employed and unemployed but seeking work, as well as first-time job seekers — rose by 407,000 to 51.15 million in March.

It said 51 million people were part of the labor force in March 2023.

This translated to a labor force participation rate of 65.3%, compared with 64.8% a month earlier and 66% a year ago.

The average Filipino employee worked for 40.7 hours a week.

RESKILLING, UPSKILLING
Carlos Miguel S. Oñate, Trade Union Congress of the Philippines legislative officer, said the rise in the participate rate showed that more Filipinos were seeking jobs.

He added that labor rights should be upheld through upskilling and by creating new job opportunities especially for fresh graduates.

In a statement, National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said the government would continue to prioritize the creation of high-quality and well-paying jobs.

“We will focus on attracting job-generating investments from the private sector and scaling up social and physical infrastructure to improve our people’s employment prospects to achieve this goal,” he said. “These will be accompanied by reskilling and upskilling programs to increase employability.”

The biggest monthly job loss in March was seen in agriculture and forestry, which slashed 318,000 workers to 9.04 million. It was followed by transportation and storage, which was 292,000 workers down to 3.56 million, and construction, where workers fell by 214,000 to 4.55 million.

Month-on-month job gains were recorded in public administration and defense, which was up by 606,000 to 3.29 million, manufacturing which added 351,000 jobs to 4.02 million, and information and communications which was up by 159,000 to 529,000.

Year on year, agriculture and forestry shed the most workers at 881,000, followed by fishing and aquaculture which was down by 449,000 to 1.03 million, and accommodation and food service activities which fell by 118,000 to 2.56 million.

On the other hand, wholesale and retail trade posted the biggest yearly job gains in March after hiring 963,000 more workers to 10.75 million. Manufacturing added 553,000 workers to 4.02 million, while public administration and defense was up by 229,000.

“The unemployment rate will continue to be pressured upwards in April because of inflation,” Mr. Terosa said.

He cited the need to monitor proposals for a legislated wage increase, which he said could lead to gloomy job prospects.

March factory output falls, steepest in almost 2 years

May 9, 2024 | 12:33 am

PHILIPPINE FACTORIES posted their worst performance in 23 months after output fell by 0.8% in March, according to the local statistics agency.

This was a reversal of the 7.2% growth in February, based on the results of the Philippine Statistics Authority’s (PSA) Monthly Integrated Survey of Selected Industries. Factory output rose by 6% in March last year.

Robert Dan J. Roces, chief economist at Security Bank Corp., blamed rising material costs and softening domestic demand for the plunge in the output as measured by the volume of production index.

“Deterioration in operations due to this seems likely, given the substantial output drop compared with February’s revised growth,” he said via Viber.

The production decline suggests potentially weaker demand and production challenges, he added.

Month on month, the manufacturing sector’s output rose by 0.8%, compared with 0.5% in February. Stripping out seasonality factors, factory output declined by 4.7%.

Output growth slowed to 3% last quarter from 5.5% a year earlier.

This was probably due to inflation, high interest rates and the global economic uncertainty, Mr. Roces said.

Inflation quickened for the third straight month to 3.8% in April. It was 3.7% in March and 3.4% in February.

Markets expect the Philippine central bank to delay interest rate cuts because of this. The Monetary Board has kept its key rate to a 17-year high of 6.5% after increasing it by 450 basis points (bps) from May 2022 to October 2023.

Philippine Chamber of Commerce and Industry (PCCI) President George T. Barcelon attributed the March contraction to weak demand in the retail sector, the peso’s depreciation against the dollar and higher import costs.

Manufacturers could also not pass on their costs given the weak market, he said by telephone. Mr. Barcelon expects factory output growth to slow this year.

Average capacity utilization averaged 75.3% in March compared with 75.1% a month earlier and 73.6% a year ago.

In contrast to the PSA report, S&P Global Purchasing Managers’ Index (PMI) for March was 50.9, suggesting that factory activity expanded, though slower than in January.

A reading above 50 shows expansion in manufacturing activity, anything below 50 shows the opposite.

The index was 52.2 in April, the strongest improvement in five months.

The statistics agency said the factory output decline in March was driven by the manufacture of food products, which contracted by 8.1%. Food products account for 18.7% of manufacturing activity.

Also contributing to the decline was computer, electronic and optical products, whose growth slowed to 5.3%, and coke and refined petroleum products, whose growth slowed to 10.2%.

Out of the remaining 19 industry divisions, 12 posted yearly declines, while seven recorded higher growth, the PSA said.

The manufacture of chemical and chemical products had the highest growth at 29.1%. — Abigail Marie P. Yraola

Philippines raises $2B from dollar bond sale

May 9, 2024 | 12:32 am

By Luisa Maria Jacinta C. Jocson, Reporter

THE PHILIPPINES raised $2 billion (P114.7 billion) from its first global bond sale this year, the Bureau of the Treasury (BTr) said on Wednesday.

The issuance of the dual-tranche 10- and 25-year fixed-rate global bonds had a “strong reception and record tight pricing levels,” National Treasurer Sharon P. Almanza said in a statement.

The 10-year notes were priced at 80 basis points (bps) above US Treasuries, tighter than the initial pricing of US Treasuries plus 120 bps.

The 25-year sustainability bonds were priced at 5.6% at par, which is also tighter than the initial price guidance of 6.05%.

Finance Secretary Ralph G. Recto said the government secured the funding at “very cheap” rates.

“The 10-year spread has been the tightest among all our similar issuances since 2022, while the 25-year sustainability tranche achieved the second-best rate in the government’s history,” he said in a statement.

“The tight pricing, especially compared with higher-rated peers, serves as an indication of the country’s exceptional performance beyond its current credit rating and makes a good case for a rating upgrade,” he added.

The dollar bonds are shelf-registered with the US Securities and Exchange Commission and will be settled on May 14.

Proceeds from the issuance will be used for general budget financing, the Treasury said. Funds raised from the 25-year debt will also be used for “refinancing programs and expenditures in line with the republic’s sustainable finance framework.”

Bank of America, Citigroup, HSBC, JPMorgan, Morgan Stanley, Standard Chartered and UBS were tapped as the joint bookrunners.

On Tuesday, Fitch Ratings, Moody’s Ratings and S&P Global Ratings rated the proposed bond offer at “BBB,” “Baa2” and “BBB+,” respectively, matching their ratings for the Philippines’ sovereign debt.

The BTr said the transaction attracted interest from a “diverse pool of high-quality global accounts.”

“Despite elevated volatility in the US Treasury rate markets in recent weeks, the republic took advantage of improving market sentiment following a softer-than-expected US labor market print which alleviated concerns over the Fed rate path.”

The bond sale showed “strong demand at much lower borrowing costs versus initial guidance,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

“In line with the earlier guidance, it is actually on the high side which is a good signal in terms of large market demand and takeup,” he added.

Last year, the Philippine government raised $3 billion from its three-tranche dollar bond sale in January, $1.26 billion from its retail dollar bond issue in October and $1 billion from its maiden issuance of Sukuk bonds in December.

The government’s borrowing program is set at P2.57 trillion this year, a quarter of which will come from foreign sources.

The government borrows from external and local sources to fund a budget deficit capped at 5.6% of the gross domestic product.

Philippine Q1 farm output flat amid El Niño

May 9, 2024 | 12:31 am

rice farmer-carabao — PHILIPPINE STAR/EDD GUMBAN

By Adrian H. Halili, Reporter

PHILIPPINE AGRICULTURAL production growth was flat in the first quarter amid a prolonged dry spell induced by El Niño, according to the local statistics agency.

In a report on Wednesday, the Philippine Statistics Authority (PSA) said the value of farm output at constant 2018 prices rose by 0.05% to P428.99 billion from a year earlier. Expansion was 2.1% a year ago and 0.9% in the previous quarter.

The PSA attributed the growth to higher poultry production values.

At current prices, the value of production in agriculture and fisheries rose by 6.7% year on year to P659.02 billion.

“The impact of reduced rainfall and hotter temperatures were evident in lower crops and fishery production in the first quarter,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. said in a statement.

“If El Niño will persist through the second quarter, we’re cautiously optimistic that the interventions we have taken will allow the agriculture sector to mend and return better results between April and June,” he added.

The state weather bureau has said El Niño is weakening though its effects are expected to last until August.

“One major factor impacting crops is El Niño, including the delayed distribution of input subsidies,” former Agriculture Secretary William D. Dar said in a text message.

Crops, which accounted for 57.6% of total farm output, slid by 0.3%, a reversal of the 1.7% growth a year earlier and 0.3% advance in the fourth quarter.

Production of palay or unmilled rice contracted by 2%, reversing the 5.2% growth a year ago.

“When you have less water and you have El Niño… there’s also the prevalence of pests and diseases in crops, so that affected their productivity,” Danilo V. Fausto, president of the Philippine Chamber of Agriculture and Food, Inc., said by telephone.

Palay production declined to 4.69 million metric tons (MT) from 4.78 million MT a year earlier, the PSA said. Corn output growth slowed to 0.5% from 5.2% a year ago.

The Department of Agriculture estimates damage from El Niño at P5.9 billion, with rice and corn as the most affected crops. Losses for rice were valued at P3.4 billion, while corn losses reached P1.76 billion.

The value of other crops also increased including onion (28.6%), coffee (25.2%), sugarcane (17.2%), tobacco (9.5%), cabbage (8.2%), calamansi (6.3%), cacao (2.7%), mango (2.6%), pineapple (1.2%), rubber (1%) and tomato (0.5%).

On the other hand, declines were reported for sweet potato (9%), cassava (8.9), mongo (6.4%), banana (4.5%), ampalaya (4%), eggplant (3.6%), coconut (3.3%), abaca (1.5%) and potato (0.7%).

TRADE POLICY
Crop output decline should be blamed on the state’s import policies, not on El Niño alone, said Leonardo A. Lanzona, economics professor at the Ateneo de Manila University.

“A lot of attention is given to the agricultural sector as inflation is heavily caused by food inflation,” he said in a Facebook Messenger chat. “A significant proportion of the resources has been spent on getting imports, especially for rice, to reduce prices.”

Rice imports have reached 1.51 million metric tons as of April 25, according to the Bureau of Plant Industry.

“As a result, overall agricultural production has remained at a standstill because trade policy has offset domestic agricultural policy,” he added.

President Ferdinand R. Marcos, Jr. has ordered the Agriculture, Finance and Trade departments to ease requirements for farm imports.

PSA data showed poultry production grew by 5.9% during the period, compared with a year earlier and 7.8% in the fourth quarter.

The poultry sector was the sole gainer last quarter, accounting for 16% of the total farm output.

“Although you have poultry imports, the local industry is resisting these,” Mr. Fausto said. “People still prefer fresh over imported frozen food.”

Most subsectors under poultry posted growth last quarter except for duck eggs, which declined by 4.3%. Chicken (7.7%), chicken eggs (2.4%) and duck (1.6%) all gained.

“The poultry industry was better prepared for El Niño,” Roy S. Kempis, director of the Center for Business Innovation in Angeles University, said in a Viber message. “The investment and actual poultry operations using climate-controlled poultry housing systems prevented chicken mortalities.”

Livestock output, which accounted for 13.9% of the total farm output, fell by 3.6% during the period, reversing the 4.1% gain a year earlier and 2.7% growth in the previous quarter.

PSA data showed an increase in the value of production for dairy (3.7%), carabao (1%) and cattle (0.3%), while hog and goat declined by 4.3% and 4.1%.

The PSA said fishery production declined by 1.3% in the first quarter, reversing the 0.5% growth a year earlier. Fisheries accounted for 12.5% of the total farm output.

“The decline in fishery production was not because of El Niño,” Mr. Kempis said. “This could be attributed to the fishing ban that was still in effect in January and February for some fish species like sardines and mackerel including round scad.”

Agriculture contributes about a tenth to the country’s economic output.

SMIC income hits P18.4B in Q1, banking business dominates

May 9, 2024 | 12:15 am

SM Investments Corp. (SMIC) said it saw a 6% increase in its consolidated net income for the first quarter (Q1), reaching P18.4 billion from P17.3 billion last year, driven by higher revenues across its businesses.

Consolidated revenues climbed by 4% to P144 billion compared with P138.3 billion last year, SMIC said in a statement on Wednesday.

Banking accounted for 52% of reported net earnings from core businesses, followed by property at 29%, retail at 12%, and portfolio investments at 7%.

“We continue to benefit from the country’s underlying economic growth and we adapt to reflect consumers’ evolving spending habits and priorities,” said SMIC President and Chief Executive Officer Frederic C. DyBuncio.

“Looking ahead, our outlook remains cautiously optimistic and our expansion is on track,” he added.

SM Retail’s first-quarter net income dropped by 20.5% to P3.1 billion from P3.9 billion last year. Its revenues increased by 3% to P93.8 billion.

Food retail revenues improved by 6% to P57 billion.

In terms of nonfood retail, department store revenue fell by 4% to P22.4 billion, while specialty retail revenue went down by 1% to P20.4 billion due to weaker consumer spending.

The conglomerate’s banking unit, BDO Unibank, Inc., saw a 12% increase in its net income to P18.5 billion as net interest income grew by 13%, while deposits increased by 13%.

China Banking Corp. recorded an 18% climb in net income to P5.9 billion. Net interest income rose by 18% to P15 billion driven by higher asset yields and loan volume. Gross loans increased by 11% to P805 billion.

SMIC’s property unit, SM Prime Holdings, Inc., logged an 11% increase in its first-quarter consolidated net income to P10.5 billion as consolidated revenue rose by 7% to P30.7 billion.

Revenue of the mall business, which contributed 59% of consolidated revenues, increased by 7% to P18.2 billion. Mall rental income rose by 8% to P15.8 billion.

Other revenues including cinema and event ticket sales stood at P2.5 billion.

The primary residential business group, which accounted for 28% of consolidated revenues, rose by 10% to P8.5 billion revenues. Reservation sales reached P26.5 billion.

Revenues of other business segments, composed of offices, hotels, and convention centers, grew 9% to P3.4 billion.

SMIC said the net income of its portfolio investments was driven by Atlas Consolidated Mining and Development Corp. and the NEO Group.

“SM Investments expects the portfolio businesses to make a larger contribution to the group’s revenues and earnings over time,” it said.

The conglomerate’s total assets stood at P1.6 trillion while the gearing ratio remained conservative with 33% net debt to 67% equity.

SMIC and SM Prime have issued their maiden $3-billion multi-issuer euro medium-term note (EMTN) program. EMTNs are debt securities that are issued and traded overseas.

SMIC SG Holdings Pte. Ltd. and SMPHI SG Holdings Pte. Ltd. jointly established the EMTN program.

SMIC SG Holdings is a wholly owned subsidiary of SMIC, while SMPHI SG Holdings is a wholly owned unit of SM Prime.

“This EMTN program will allow SMIC and SM Prime to tap the offshore bond market to fund its continued growth and expansion,” the conglomerate said.

On Wednesday, SMIC shares retreated by 2.8% or P26.50 to P921 apiece. — Revin Mikhael D. Ochave

JG Summit’s Q1 income gets boost from P7.9-B merger gain

May 9, 2024 | 12:14 am

JG Summit Holdings, Inc. reported a 120% increase in its attributable net income for the first quarter, reaching P11 billion compared with P5 billion in 2023.

This growth was driven by the performances across the company’s food, real estate, and air transport units, JG Summit said in a statement on Wednesday.

First-quarter consolidated revenue rose by 18% to P96.7 billion, while core net income surged by over two times to P12.6 billion, JG Summit said.

JG Summit’s first-quarter core net income was also boosted by the P7.9-billion gain from the merger of the Bank of the Philippine Islands and Robinsons Bank that took effect at the start of 2024.

“We kicked off 2024 with sustained improvements across our businesses, seeing robust sales volumes in our petrochemical and food businesses, as well as strong demand for air travel, leisure, and hospitality services. Margins have been buoyed by a combination of volume growth, managed input costs, and operating leverage,” JG Summit President and Chief Executive Officer Lance Y. Gokongwei said.

“We have also begun seeing green shoots in our petrochemicals arm as value realization has begun for its commercial and operational initiatives,” he added.

The conglomerate’s food segment led by Universal Robina Corp. (URC) recorded a 21% increase in net income to P4.1 billion led by higher foreign exchange gains. Its revenue increased by 7% to P42.6 billion driven by growth in the branded consumer foods and agro-industrial and commodities divisions.

Robinsons Land Corp. (RLC) recorded a 53% increase in net income to P4.07 billion. Revenue rose by 18% to P10.5 billion.

“Looking at its operations, occupancy rate remained above industry average, being at 93% and 84% for malls and offices, respectively,” JG Summit said.

Cebu Air, Inc. (CEB) doubled its net income to P2.2 billion as revenue increased by 21.3% to P25.3 billion. The airline flew 5.5 million passengers during the period, up by 14%, due to travelers returning from the Christmas holidays, as well as trips taken during the Easter break and other festivals and events.

“The airline continued to work on expanding its capacity while improving operational resiliency by investing in additional fleet, leading CEB to have 17 more aircraft at the end of the first quarter versus the same period last year. As a result, on-time performance remained solid at 77% amidst the peak period and customer satisfaction measured by net promoter score improved year on year,” JG Summit said.

JG Summit Olefins Corp. (JGSOC) widened its net loss to P3.3 billion in the first quarter from P2.7 billion last year due to higher interest expense, depreciation on new facilities, and foreign exchange losses.

JGSOC’s revenues grew by 62% to P14.1 billion on better sales volumes across all segments, higher utilization rates, and improved asset reliability.

For its core investments, JG Summit recorded a 22% drop in its dividend income from PLDT, Inc. as no special dividends were declared in the first quarter. Regular dividends saw a P1 increase to P46 per share.

This was offset by the company’s equity earnings from Manila Electric Co., which grew 19% year on year. This was on the back of higher distribution sales volumes as well as better performance of its power generation, retail electricity supply, and non-power related businesses.

“Looking ahead, we continue to work on growing our airline’s capacity to serve the gradual uptick in demand, driving volume-based growth in our food and beverage business, sustaining the momentum in our property unit, and accelerating the transformation program of our petrochemicals arm,” Mr. Gokongwei said.

“We will also continue to support our ecosystem plays, which are on the path to attaining scale via customer acquisition and new product launches,” he added.

On Wednesday, JG Summit shares rose by 3.8% or P1.20 to P32.80 apiece. — Revin Mikhael D. Ochave