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Acquisitions, synergy, and technology headline Aboitiz Group’s Great Transformation

From left: Aboitiz Equity Ventures’ Chief Synergy Officer Eduardo “Dudes” Aboitiz, Chief Strategy Officer Chris Beshouri, and Transformation Head Dea Franko-Csuba discussed Aboitiz’s transformation journey and the next steps to evolve the Group into the country’s first techglomerate. Onstage with them is Master of Ceremonies and UnionBank Co-Brand Product Manager Jerrica Pastor.

The Aboitiz Group reinforced its transformation goals for 2024 and beyond as it put its partnerships, acquisitions, and interbusiness opportunities front and center during its 8th annual Leaders Conference (LeadCon) held this month. Over 500 Aboitiz leaders gathered for the conference at Solaire Grand Ballroom, where the Group not only unveiled its growth strategies, but also presented its cutting-edge innovations including its first pair of AI-powered virtual team members.

With the LeadCon’s theme ‘Unlocking Techglomerate Potential’, the Group took stock of the steps that have been taken in recent years in order to transform itself into the Philippines’ first techglomerate. As the Group experienced massive growth in recent years, it is poised to form a sustainable business ecosystem among its many diverse companies that will become the core of its strategy in the coming years.

Aboitiz Group President and CEO Sabin M. Aboitiz called on Aboitiz Group leaders to be models and spread the values of transformation to their teams.

The Aboitiz Group is in the third year of its Great Transformation initiative, with everything from its culture, to processes, to technology evolving at a rapid pace. Aboitiz Group President and CEO Sabin M. Aboitiz emphasized the need for team leaders to imbibe the value of transformation and be the examples for their team members.

“Our people will never change unless our leaders do, and our leaders will never change unless they know why they’re doing it and why it’s important. It’s our responsibility as leaders to make sure everyone is supported. When we genuinely care about our teams, we create a leadership that inspires more than motivates,” Sabin Aboitiz said. 

Sabin Aboitiz added that the LeadCon is an avenue for the Group’s team leaders to learn the key factors to unlocking techglomerate potential for their teams — namely strategy, synergy, and transformation — directly from Aboitiz’s top brass. Each key speaker in the event offered a view of the Aboitiz Group’s transformation journey and the opportunities that lie ahead.

Chris Beshouri, Aboitiz Equity Ventures’ (AEV) Chief Strategy Officer, presented how the Aboitiz Group has rapidly transformed in the last decade after divesting its shipping and transport business. In such a short timespan, the Group has expanded to become a major conglomerate, diversifying its business interests with big-ticket acquisitions such as Citibank’s Philippine consumer banking business, the operation and management of the Mactan-Cebu International Airport, and a 40% stake in Coca-Cola Beverages Philippines, Inc., among others.

The Group has also entered into major partnerships. One is with Japan’s largest power generation company JERA, and a separate partnership with Meralco PowerGen and San Miguel Global Power Holdings for the country’s first and most expansive integrated LNG facility in a deal worth $3.3 billion. In just three and a half years, the Aboitiz Group had entered into P255 billion worth of deals. According to Beshouri, this is the clearest sign yet of the Group’s transformation.

“The goal of transformation is to have impact. And the potential for this Group to have economic impact is enormous. If you add up the market value of the (Aboitiz) Group, we represent an estimated 4%-5% of the total PH stock market capitalization as of 2023,” Beshouri said.  

Meanwhile, Eduardo Aboitiz, AEV Chief Synergy Officer, discussed the important role synergies will play in the pursuit of the Group’s goals. Eduardo contextualized synergies as activities wherein Aboitiz businesses work together, enhancing value creation and making the whole Group to be more than the sum of its parts.

He shared that the Group is not starting from scratch. The Aboitiz story began with abaca production. From abaca, the Group started producing rope and mainly selling this to the shipping industry — which eventually became the Group’s flagship business for over 80 years.

Today, the Aboitiz ecosystem is wider, resulting in more synergy opportunities. A straightforward example is AboitizPower (AP) reliably providing 100MW of competitively-priced power to its sister companies such as Republic Cement, Pilmico, UnionBank, Aboitiz Infracapital, and Coca-Cola. The Group also leverages on synergies to strengthen its Economic Estates. The Group combines its various assets such as power, water, construction, and banking to create a stronger offer to estate locators, enhancing value for all parties involved.

There are other initiatives being pursued. Still, despite these, Eduardo emphasized that massive opportunities remained untapped. He challenged everyone to maximize synergies and integrate the thinking in every team member of the Group.

“Synergies do not start and end with the people in this room. Everyone can contribute. As we embark on this journey, we will start to see more connections appear. When we maximize these connections, that’s when we can become a fully-integrated ecosystem and be fully transformed,” he said.

The Group’s businesses are not the only ones called to transform, but the individual team leaders as well. AEV Head of Transformation Dea Franko-Csuba called on the leaders to be adaptive and open to technologies, processes, and behaviors that can improve themselves, their teams, and the business. She cited the need to embrace emerging technologies that will assist teams in automating and optimizing work processes, such as artificial intelligence (AI).

“The Transformed Aboitiz Group is not an end destination. The future of our industries is unfolding in front of our eyes and we have to constantly reimagine ourselves on the fly. To build an adaptive, intelligent organization, we need to change the way from command and control leadership to an agile, empowering leadership style, where the leaders define where we are and where we are heading but the team figures out how to get there as a collaborative effort,” Franko-Csuba said.

Transformation Head Dea Franko-Csuba (rightmost) unveils Elsie and Albert, the Aboitiz Group’s first virtual team members.

As a highlight of her discussion, she introduced the Aboitiz Group’s first-ever virtual team members, Elsie and Albert. The AI avatars were presented onstage, and gave helpful summaries of the presentations throughout the conference. They were also available to answer queries outside the event entrance, showcasing the ability of AI to assist the leaders and their teams. 

The LeadCon also welcomed guest speaker Michael J.T. Steep, Founder of the Stanford University Disruptive Technology Program, who cited the need for innovation to facilitate transformation. He advocated for the use of AI in order to assist in the growth of businesses, and encouraged leaders to not only focus on being efficient workers, but also to foster people and networking skills to find the experts that their businesses need.

The Aboitiz Group’s Leaders Conference gathers team leaders from across the Group’s various business units in order to set direction and strategy as well as share best practices and achievements within the Group. This year’s conference makes a return to a grand in-person event after several years of being held virtually or on a hybrid basis.

 

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Peso’s nonstop fall may stoke prices

BW FILE PHOTO

By Aaron Michael C. Sy, Reporter

A PROLONGED depreciation of the Philippine peso could stoke inflation, though it could also benefit the economy by boosting export earnings, analysts said.

“We see the peso’s weakness against the dollar persisting,” Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said in a Viber message on Wednesday.

“The BSP has to be ready, as they have done in the past, to intervene and battle volatility and speculative play,” he added.

Diwa C. Guinigundo, country analyst at GlobalSource Partners, said the peso’s weakness could boost export competitiveness “as long as its pass-through to inflation does not exceed the benefits of external competitiveness.”

“That is growth positive,” he said in a Viber message. “As long as the peso avoids a sharp and prolonged depreciation, the impact on inflation could be manageable. Otherwise, imported inflation could be very problematic.”

The peso closed at P58.06 against the dollar, 21 centavos stronger than on Tuesday, when it closed at the weakest level in 18 months, according to Bankers Association of the Philippines data.

The currency has depreciated by P2.69 this year from its P55.37-a-dollar close on Dec. 29, 2023.

Mr. Guinigundo, a former central bank deputy governor, said the peso could strengthen if the Bangko Sentral ng Pilipinas (BSP) turns more hawkish again.

“Any hint of the BSP’s less hawkish stance could move the market,” he added.

BSP Governor Eli M. Remolona, Jr. last week said the central bank could cut rates as early as August and earlier than the Fed amid easing inflation. He also expects one or two 25-basis-point rate cuts in the second half.

The peso is likely to be dragged down by the widening balance of payment (BoP) deficit, Mr. Guinigundo said.

The payment position widened to a $639-million deficit in April from the $148-million gap a year earlier, according to BSP data. This was also a reversal of the $1.17-billion surplus in March.

The BSP expects the country’s BoP position to end at a $700-million deficit, equivalent to 0.1% of economic output.

Juan Paolo E. Colet, managing director at China Bank Capital Corp., said the peso’s weakness could affect companies with dollar loans.

“Our currency’s weakness will have an impact on companies that have borrowed in US dollars but whose revenues are mainly in peso, because it becomes more expensive to [pay] the debt,” he said in a Viber message.

The peso has been weaker than its regional peers, and it’s mainly depreciating due to the Philippine central bank’s dovish tone, Emilio S. Neri, Jr., lead economist at Bank of the Philippine Islands, said in a Viber message.

“The Philippine economy’s narrowing current account deficit combined with possible softening of forthcoming US inflation may cap what seems to be a near-term overshoot of the exchange rate versus its expected medium-term trend,” he added.

The BSP estimates a $6.1-billion current account deficit this year, or 1.3% of economic output.

Companies welcome an earlier rate cut by the BSP because it is a sign of slowing inflation, Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., said in a Viber message.

Inflation quickened to 3.8% in April from 3.7% in March, still within the central bank’s 2-4% target for the year. It was slower than 6.6% a year earlier.

It averaged 3.4% in the first four months, below the BSP’s 3.8% full-year forecast.

Mr. Ravelas said the peso would probably remain at the P58 level as long as the BSP remains dovish.

Education, manufacturing and tourism are key growth drivers, says JG Summit CEO

JG Summit CEO Lance Y. Gokongwei delivered a keynote speech on the private sector’s role in fueling economic growth at BusinessWorld’s economic forum on Wednesday. — PHILIPPINE STAR/JESSE BUSTOS

By Revin Mikhael D. Ochave, Reporter

THE PHILIPPINE government and private sector should harness the potentials of education, manufacturing and tourism, which are critical to economic growth, JG Summit Holdings, Inc.’s top executive said on Wednesday.

The state should serve as a “key enabler” by facilitating the cost and ease of doing business, while private companies should continue to invest, create jobs and wealth to improve lives, JG Summit President and Chief Executive Officer  (CEO) Lance Y. Gokongwei said in a speech at BusinessWorld’s economic forum in Taguig City.

“Underlying these three critical areas is, of course, the importance of both physical and technological infrastructure that will support and further hasten the growth of our human capital, manufacturing sector and tourism industry,” he added.

Mr. Gokongwei said young Filipinos should have skills to let them keep up with an economy driven by technology, while teachers should be upskilled and reskilled in science, technology, engineering and mathematics.

He added that with an adequately equipped workforce, the government and business can “confidently woo global capital to pitch their tents in our country based on the undeniable resources we offer.”

Mr. Gokongwei said revitalizing the manufacturing sector would also boost the economy.

“Our industrialization hinges on the government and private sectors jointly identifying and agreeing on the manufacturing industries that we need to develop, supported by enabling policies and incentives,” he said.

The bid to become a manufacturing economy also depends on the country’s ability to equip its workforce so it can meet the demands of the emerging industrial and technological landscape.

Mr. Gokongwei added that both direct and indirect tourism receipts should form part of the Philippines’ economic growth plans.

“Our natural wonders, our kindhearted people, and our ideal location — these are the perfect ingredients to make us a tourism powerhouse with significant contributions to our gross domestic product,” he said.

Philippine economic prospects remained bright despite risks and challenges, National Economic and Development Authority Secretary Arsenio M. Balisacan told the forum in a separate speech.

“The Philippines’ prospects remain bright and amidst current projections, we are working hard to keep our fundamentals sound,” he said.

“Despite some of the greatest challenges we have ever faced, we remain committed to meeting our short-term goals. We aim for no less than socioeconomic transformation in the medium term,” he added.

Mr. Balisacan cited the need to make economic growth more inclusive amid improving poverty statistics in recent years.

“We must enhance access to high-quality employment and market opportunities and strengthen social protection, reduce poverty to single-digit levels and improve the overall quality of life,” he said.

The economy grew by 5.7% in the first quarter, slower than expected and below the state’s 6-7% target for the year.

‘SYNERGY’
George I. Royeca, chief executive officer of motorcycle ride-hailing mobile app Angkas, said informal workers have a lot to contribute to the economy.

“The challenge for us is how to create a platform for informal workers, how to provide financial services and raise financial literacy,” he told the forum. “I really hope that we can push the informal sector and make it really thrive.”

He added that the country should adopt innovative strategies in various industries.

Globe Telecom, Inc. Vice-President Emmanuel L. Estrada said there’s a need to bridge the digital divide.

“Digital connectivity has now become fundamental to economic progress,” he said at the forum. “We need not just connectivity, but universal and meaningful connectivity.”

Jesus C. Romero, chief operations officer and senior executive vice-president at Converge ICT Solutions, Inc., said the local broadband industry still has a lot of work to do in boosting capacity and cutting costs.

“There is no one-size-fits-all internet for all situations,” he told the forum. “There will be people who are better off with mobile and those who are better off with fiber broadband.”

Miguel G. Belmonte, president and CEO at BusinessWorld Publishing Corp., said public-private coordination is needed to attract investments and create more jobs.

“Among these growth drivers, what stands out to me is the inspiring synergy between the government and the private sector, which is a major driving force for the country in spurring investment, innovation and job creation,” he said.

“The private sector employs over 60% of the labor force and contributes a large chunk to Philippine GDP,” Mr. Belmonte said. “With critical industries like energy, telecommunications and infrastructure having given a huge potential to the private sector, the possibilities for the country are truly marvelous.”

NEDA backs push for rice imports by NFA

PHILIPPINE STAR/WALTER BOLLOZOS

By Beatriz Marie D. Cruz, Reporter

THE NATIONAL Economic and Development Authority (NEDA) on Wednesday backed a proposal allowing the National Food Authority (NFA) to boost rice stocks through imports during emergencies amid spiraling prices.

“I’m still in favor of strengthening the NFA’s role in buffer stocking for emergency purposes,” NEDA Secretary Arsenio M. Balisacan told reporters on the sidelines of BusinessWorld’s economic forum.

“There has to be a way of sourcing the buffer stocks in a way that won’t further destabilize the market,” he said in mixed English and Filipino. “That involves, under those circumstances where production is lacking, getting the buffer stock from imports.”

If it can’t import directly, the agency should be allowed to buy rice stocks from importers to boost its stock, he added.

The Philippines is hard-pressed to ensure that it has enough rice supply amid a prolonged dry spell brought by El Niño and the looming rains from La Niña.

“Consumption is growing simply because the population is growing, so there is that gap,” Mr. Balisacan said. “When you have that gap, you have to have additional sources of supply.”

Under the Rice Tariffication Law, the NFA can only keep its buffer stock by buying rice from local farmers.  But the local shortage keeps the agency from fulfilling its mandate, Mr. Balisacan said.

State auditors in 2022 flagged the NFA’s failure to stock up on rice. The agency’s rice inventory ranged from 111,042 metric tons (MT) to 182,612 MT, far behind the national rice buffer stocking requirement of 300,000 MT, the Commission on Audit said.

The House of Representatives on Tuesday passed on third and final reading changes to the law, including restoring the NFA’s regulatory power over the rice industry.

House Bill No. 10381 empowers the NFA to import rice if there are no available local sources, upon the approval of the Agriculture secretary.

The NFA may also require warehouses to register in its national database. The agency may also collect and analyze data on rice trading activities.

Under the bill, a food security emergency includes a shortage in rice supply and extraordinary price increases.

The Senate has yet to pass a counterpart measure.

Mr. Balisacan said Administrative Order No. 20 issued by President Ferdinand R. Marcos, Jr. last month would ensure timely and adequate farm imports.

The President had ordered agencies to reduce nontariff barriers and administrative restrictions on farm imports.

The government should not rely on the NFA alone to stabilize rice prices, Mr. Balisacan said. “We have been there, and we don’t want to go back to a regime that has been shown to not work.”

Local regular milled rice costs P49.37 a kilo, while well-milled rice costs P51.28, according to the Agriculture department’s latest price watch. Imported regular milled rice and well-milled rice cost P49.61 and P52.50.

US households still feel pinched by inflation — Fed survey

PHILIPPINE STAR/MIGUEL DE GUZMAN

US HOUSEHOLDS continued to feel pinched by inflation in late 2023 even as price pressures ebbed, the US Federal Reserve reported on Tuesday, with most Americans saying their financial situation had changed little in the past year, while parents reported times had gotten harder.

About 72% of adults were doing OK financially as of October 2023, the Fed’s annual survey on household economics and decision-making showed.

That was down from 78% in 2021 and the lowest since 2016, though little changed from 73% in 2022. The share of parents doing OK financially dropped by 5 percentage points to 64%, the lowest since 2015 when data collection began.

Inflation remained the top financial concern, according to the report. It said 65% of adults said high prices had made their situations worse, even though consumer inflation fell sharply from about 9% in June 2022 to below 4% by the time the survey was taken.

While 34% said their family’s monthly income had risen in the past year, 38% said their spending had also increased.

About 63% of adults said they could cover a hypothetical $400 emergency expense using cash or its equivalent, the same as in 2022 but down from a record high of 68% in 2021.

Covering rental housing costs was a greater challenge last year than in the year before, with 19% of renters saying they had been behind in the rent at some point in the prior year, up from 17% in 2022.

Rental costs, which have proven to be among the reasons inflation has not eased as much as Fed policy makers had hoped, were up far more than inflation overall, with the median monthly rent rising by 10% to $1,100, according to the survey.

The survey included responses from 11,000 people and was conducted in October.

It was the latest in an array of pulse-taking of US consumers to show a generalized gloom hanging over Americans’ view of the economy and their own financial well-being even as growth has exceeded expectations, and the job market remains strong.

Monthly surveys from other organizations like the Conference Board and the University of Michigan have shown a persistent pessimism that began about three years ago alongside the arrival of the highest inflation since the 1980s.

‘HIGHEST PRIORITY’
The dourness registers with Fed officials who continue to see the effort to bring inflation back to the central bank’s 2% target as their top priority.

The burden of rapid inflation “was felt early because goods prices and prices in the market went up faster than wages and income then, and so people definitely felt they were falling behind,” Atlanta Fed President Raphael Bostic said at a conference in Florida this week.

Wage gains have generally exceeded price increases over the last year, especially for the lowest earners. Still, consumers retain memories of the pain inflicted by price pressures, and surveys, including from the Fed, show how deeply that has become ingrained.

“People don’t do that math continuously to know that they’re catching up,” Mr. Bostic said.

“I think there’s just some lived experiences (that are) going to have to happen where people will at some point do a recalibration, but I don’t know exactly when that’s going to be,” he said. “And so, for me, it’s just we got to get inflation back to our target. And that’s got to be the highest priority.” — Reuters

Tiny chef, new tricks

WHEN we went to Le Petit Chef two years ago and saw a tiny hologram fix our dinner (that’s our story and we’re sticking to it), we thought we had seen it all.

Then last year, Le Petit Chef at the Grand Hyatt Manila had a new schtick — recreating Marco Polo’s travels for the diner. The concept has changed once again, and the Grand Hyatt guided us through the experience through a tasting on May 14. Le Petit Chef is a project by Belgian-based company Skullmapping in 2015, and the idea has been brought to several cities around the world.

During the meal, a projection of the chef (the size of a finger) and his world is shown on immaculate white tables, positioned with precision to create the illusion. While his first outing saw him in his native France, for this edition, Le Petit Chef has a different experience in store, with the goal being to teach diners how to be the world’s greatest chef.

The first course took us to South America, to the civilizations that first cultivated the tomato. While the chef discusses the history of the tomato and how it arrived in Europe (we learned that day that the pewter plates used by European nobles reacted with the tomatoes, and led to poisoning; which earned the tomato a negative reception for a while). A marinated cherry tomato was served to us with burrata, Parmesan crumble, basil oil, and tomato sorbet (in the shape of a potato, another South American contribution).

The next course was a course in art: here, the chef talked to the diners about his reverence for Russian artist Wassily Kandinsky, and how several art styles influenced his plating. The table settings were changed to have placemats in the shape of artists’ palettes, printed with several famous paintings. A pan-seared salmon was served with buttered asparagus, and purees of beetroot, basil, and lemon and pepper emulsions, splashed on the plate in the style of Kandinsky. The salmon was of exquisite quality and even with the “paint,” had a very mild flavor.

The chef then took us on a more personal trip: back to his memories of an idyllic forest, camping with his grandmother. We watched them cook and in turns, beat and befriend various forest critters. The pair’s finished dish was a French Corn-fed Chicken Roulade with porcini mushrooms, truffle mushroom puree, and roasted chicken jus. It was wrapped in leaves and wonderfully earthy.

The chef bursts into song (about cooking, in the style of Beauty and the Beast’s “Be Our Guest”) to present the last savory course, a Surf and Turf platter with Australian grass-fed beef tenderloin with a black peppercorn brandy sauce; coupled with grilled king prawn in garlic butter, fondant potato, glazed carrot, and French beans.

The dessert was a bit of a mystery: dressed up as we all were, we were handed blowtorches and syringes before the course was served. It turned out that we were to use these to brown Italian meringues and to pump cream onto our fly agaric “mushrooms” (the real mushroom has hallucinogenic properties, and the task given to us was certainly a trip). The mushroom, rouged with a red fruit glaze, was actually a white chocolate case holding white chocolate mousse and ganache inside, with different fruit jams at the mushroom’s stalk and cap.

The program itself wasn’t the only change this year. The dinner’s venue moved from the Grand Hyatt’s upstairs bar The Peak, to the larger Gallery downstairs. According to the hotel’s Executive Chef Mark Hagan, it’s because they’re reopening The Peak once again as a nightclub, in response to the post-pandemic party boom.

Another contribution of the party boom to the move downstairs is more seating: the former location could only accommodate 16 seats, but the new location in the Gallery allows for 28 seats. “We’re always getting a lot of requests,” he said. “We were nearly working on a 95% occupancy rate.”

We must say that the new Le Petit Chef experience is a lot more sophisticated than what came before, but the new location must work on its acoustics (the miniature chef’s voice echoes around the room; and so did our dinner companions’, so we had a hard time hearing both).

As exclusive holders of the Le Petit Chef contract in Manila, we asked Mr. Hagan why the chef was such a nice fit for the hotel. “We want to give people a dining experience which they can remember… a link to the hotel,” he said. “We’re here to bring families and people together and have memories.”

Guests can choose the Le Grand Suite Stay and Dine Experience, priced at P32,888 net for two, which includes an overnight stay in a Grand Suite and daily breakfast at The Grand Kitchen, a Le Grand Chef Menu for two, access to the Grand Club Lounge, and a special welcome amenity upon arrival. Those who wish to only dine can opt for the Le Grand Chef Menu, priced at P7,500 net per person and a Le Petit Chef Kids Menu priced at P4,000 net per person.

For inquiries, call 8838-1234 or e-mail lepetitchefmanila@hyatt.com. — Joseph L. Garcia

Cebu Pacific may finalize aircraft order by June

CEBUPACIFICAIR.COM

BUDGET CARRIER Cebu Pacific, operated by Cebu Air, Inc. is expected to announce its supplier for the airline’s $12-billion aircraft order by June, the company’s top official said on Wednesday.

“[We have] not yet selected. We will make the announcement, I think, in the next couple of months. Maybe by June,” Lance Y. Gokongwei, chairman of Cebu Air, said on the sidelines of the BusinessWorld Economic Forum 2024.

The budget carrier is planning to order more than 100 narrow-body aircraft from Boeing or Airbus valued at roughly $12 billion based on current list of prices, Cebu Pacific said.

The airline company is nearing the completion of its aircraft order, which is expected to boost its overall fleet amid its plan to increase flight frequencies to serve the growing demand for air travel.

“We are close to the finish line for [our aircraft order]. We have not put a date yet, but we are still close to the timetable,” Alex B. Reyes, chief strategy officer of Cebu Pacific, said separately on the sidelines of an aviation forum.

Mr. Reyes, however, did not say if the company is leaning towards Airbus or Boeing for its planned aircraft order.

Cebu Pacific currently operates a fleet of 73 Airbus and ATR aircraft, which it earlier said will double with its planned order of more aircraft this year.

Last year, Cebu Air said it would lower its fleet growth rate for 2024 as engine maker Pratt & Whitney (P&W) inspects A320/321 NEO aircraft engines worldwide following suspected issues.

Currently, between 10 to 20 aircraft of Cebu Pacific are parked because of the ongoing issue with global engine maker P&W.

To date, Cebu Pacific flies to 35 domestic and 24 international destinations in Asia, Australia, and the Middle East. — Ashley Erika O. Jose

Red Lobster food chain goes bankrupt after unlimited shrimp deal

SEAFOOD restaurant chain Red Lobster filed for bankruptcy, succumbing to onerous leases, high labor costs, and a disastrous unlimited shrimp promotion.

The Orlando, Florida-based company filed for Chapter 11 protection on Sunday, listing assets and liabilities of $1 billion to $10 billion each in its bankruptcy petition. The filing allows the company to keep operating while it works out a plan to repay creditors.

Red Lobster plans to hand control of the company to its lenders, led by Fortress Investment Group, who have agreed to provide $100 million in financing to support the chain through bankruptcy. The takeover offer is in the form of a stalking horse bid, meaning it will set the floor price for Red Lobster’s assets and is subject to better bids should any materialize in the coming weeks, according to court documents.   

The restaurant chain had been deteriorating for several years, with diners down around 30% since 2019, Chief Executive Officer (CEO) Jonathan Tibus wrote in court papers. While the business had shown signs of recovery since the pandemic, sales declined sharply in the last 12 months, Tibus wrote. It lost $76 million in the 2023 fiscal year.

Inflationary pressures have kept customers from dining out and higher labor costs strained the company’s finances. A “material portion” of Red Lobster’s leases were priced above market rates. In May 2023, the company changed its $20 “Ultimate Endless Shrimp” from a limited time offer to a permanent promotion, costing it $11 million as diners devoured expensive plates of shrimp.

Red Lobster traces its roots to a single restaurant in Lakeland, Florida in 1968. It expanded rapidly in the 1970s and 1980s, and developed a loyal following for its Cheddar Bay Biscuits. The company now operates more than 550 restaurants in the US and Canada.

The restaurant chain, which has been owned by seafood supplier Thai Union Group Plc since 2020, serves 64 million customers per year and purchases 20% of all North American lobster tails, as well as 16% of all rock lobsters worldwide.

Thai Union and Red Lobster had been in talks with lenders for an out-of-court deal that would hand the creditors 80% of the company, but discussions fell through. Lenders made additional loans worth $20 million to Red Lobster in February, but they weren’t willing to put in more money without support from the owner, according to court papers.

ENDLESS SHRIMPS
Meanwhile, Thai Union disputed the contents of a sworn statement filed in bankruptcy court from Red Lobster CEO Jonathan Tibus, which included allegations that the seafood supplier “exercised an outsized influence on the company’s shrimp purchasing.”

A Red Lobster lawyer read a statement from Thai Union during the restaurant chain’s first bankruptcy court hearing in Orlando, Florida on Tuesday. Thai Union disputes all statements concerning the company and its relationship to Red Lobster, the lawyer said.

Mr. Tibus alleged the decision by former management in May 2023 to change its $20 “Ultimate Endless Shrimp” deal from a limited time offer to a permanent deal cost the company $11 million. The deal also saddled Red Lobster “with burdensome supply obligations, particularly with its equity sponsor, Thai Union,” he said.

Ultimate Endless Shrimp was also heavily promoted in Red Lobster at its locations, which Mr. Tibus said was “atypical for the company” and led to major shrimp shortages at its restaurants. Some Red Lobster locations went days or sometimes weeks without certain types of shrimp, he said.

A former Red Lobster executive also allegedly directed Thai Union to continue producing shrimp for its restaurants “that did not flow through the traditional supply process or bid cycle or adhere to the Company’s demand projections,” Mr. Tibus said. Former management also eliminated other suppliers of breaded shrimp, “leaving Thai Union with an exclusive deal that led to higher costs to Red Lobster,” he said.

The chain employs 34,000 people in the US and an additional 2,000 in Canada. Last week, it shuttered 93 underperforming stores.

The case is Red Lobster Management LLC, number 24-02486, in the US Bankruptcy Court for the Middle District of Florida (Orlando). — Bloomberg

Weak peso brings costs, uncertainty, says Gokongwei

PHILIPPINE STAR/WALTER BOLLOZOS

THE PHILIPPINE peso’s recent weakness against the dollar will bring cost pressures and additional uncertainty to corporates, according to the top official of listed conglomerate JG Summit Holdings, Inc.

“As business people, we don’t like any abrupt changes. The weakening of the peso in the last few days is a little bit fast,” JG Summit President and Chief Executive Officer Lance Y. Gokongwei said at the sidelines of the BusinessWorld Economic Forum 2024 in Taguig City on Wednesday.

“The exchange rate moving down, of course, for a certain of our industries is negative. Definitely, anything abrupt creates more uncertainty and some cost pressures. A lot of the inputs we use are imported — fuel especially,” Mr. Gokongwei added.

The peso ended at P58.27 per dollar on Tuesday, which was its weakest close in over 18 months.

On Wednesday, the local unit rebounded by 21 centavos to P58.06 per dollar.

SUPPORT FOR PETROCHEMICAL INDUSTRY
Meanwhile, Mr. Gokongwei said government support is needed to boost the operations of JG Summit’s petrochemical subsidiary JG Summit Olefins Corp. (JGSOC), which has been hampered by high oil prices and overcapacity. 

“We need to work with the government. We need to develop a manufacturing policy to support vital industries in the Philippines, including the petrochemical industry,” he said. 

“Petrochemicals are the building blocks essential to the manufacture of goods that we use in our daily lives, such as food packaging, clothes, electronic gadgets, vehicles, furniture, appliances, medicines, and a whole lot more. A stable and thriving domestic petrochemical industry will guarantee a steady supply of critical manufacturing ingredients to scale up our manufacturing competitiveness that, in turn, will generate more jobs and create prosperity,” Mr. Gokongwei added.

In January, JGSOC inaugurated a P150-billion expanded petrochemical facility at Batangas City.

JGSOC posted a wider net loss of P3.3 billion in the first quarter from P2.7 billion last year as a result of higher interest expenses, depreciation on new facilities, and foreign exchange losses.

According to Mr. Gokongwei, JGSOC’s operations have been affected by surging oil prices following tensions in Europe, as well as Chinese exports.

“I think we’re really facing double whammy of increasing input prices because of very high oil prices, partially driven by the war in Ukraine. But secondly, there’s rampant overcapacity, including exports out of China for petrochemicals,” he said.

“It’s the single largest investment we’ve made at P150 billion. We do need support and assistance from the government, particularly in looking at illegal dumping and other unfair trade measures,” Mr. Gokongwei added.

Asked on his projection for JGSOC’s recovery, Mr. Gokongwei did not provide a specific timeline but said they will work through the “very tough time” they’re currently experiencing.

“We will work through it. But it’s not going to be easy. It’s a long-term investment, as they say,” he said.

On the other hand, Mr. Gokongwei said Robinsons Land Corp. (RLC) is scheduled to open more properties, such as the five-storey upscale Opus Mall at Bridgetowne District, Quezon City in July.

He also noted the scheduled launch of GBF Towers 1 and 2 office buildings, both in Bridgetowne, as well as the progressive opening of NUSTAR Resort & Casino in Cebu by the third and fourth quarters.

Mr. Gokongwei also serves as RLC’s chairman, president, and CEO.

“We’re trying to grow across all fronts. We have various businesses spanning malls, offices, hotels, logistics, and destination estates,” he said.

On Wednesday, JG Summit fell by 1.2% or 40 centavos to P33.05 per share. — Revin Mikhael D. Ochave

Building a kitchen with Ikea

DURING a tour around the Ikea store’s kitchen department late last month, guests got a view of the possibilities of the Metod and Enhet kitchen systems.

The Metod kitchen straddles the line between traditional and minimalist, while the Enhet kitchen is more affordable and meant for more compact homes. Both of them are available through a series of cabinets and doors.

It sounds overwhelming, but we were also introduced to the Ikea planning system, accessible through IKEA.ph/kitchen. Here, one can book a session online via video call or in-store at the Planning Studio, where kitchen planning experts can help a shopper sort out their kitchen preferences (and help set a budget). They will ask for your kitchen measurements and preferences. After a plan is drawn up, one can pay at the check-out counters or online.

Kitchen installation services are available in the Greater Manila Area and Metro Cebu. Ikea Family members get a 10% rebate through Ikea Gift Cards for a minimum purchase of P150,000 on Metod kitchens in-store from May 1 to June 2; 0% installment payment plans up to six months are also available for a minimum purchase of P20,000 for BDO, BPI, HSBC, Unionbank, and Metrobank credit card holders. There is a 25-year guarantee on the Metod kitchens that covers defects in the material and workmanship and a 10-year guarantee for the Enhet kitchen system, while Ikea appliances have a five-year guarantee.

Finally, to complete the kitchen experience, Ikea gave us a few recipes that one can do with the food available at their stores:

Ikea Veggie Ball Salad
Veggie Balls (available frozen at Ikea)

Salad Vegetable mix

Onions

Tomatoes

1 red onion, chopped

Avocado

Feta Cheese

Salted Egg

Procedure:

Cook veggie balls in a pan, grill, or in the oven for two to four minutes until golden-brown.

Mix all ingredients in a bowl, add some olive oil or any other dressing.

Kinilaw na Salmon
4 pieces fish fillet ASC Salmon, 500 gm (available frozen at Ikea)

1/4 cup vinegar for washing

1/3 cup vinegar (can be spiced)

1 red onion, chopped

2 tablespoons of ginger, sliced into fine strips or small cubes

4 tablespoons of calamansi juice (lime or lemon may be substituted)

salt and pepper to taste

Procedure:

Get a bowl and combine the cubed fish and 3/4 cup of vinegar. Mix them well and let them stand for two minutes.

Drain the vinegar while lightly squeezing out the fish cubes — this will help reduce the fishy smell.

Combine all the remaining ingredients, and gently toss until well-blended.

Cover and place in the fridge for at least 30 minutes (the Ikea recipe comes with a warning that too much time soaking in the fridge might “overcook” the fish in the acids, but a maximum of up to three hours is allowed).

Serve chilled. — JLG

Philippines’ top fintech GCash eyes 2025 IPO, chairman says

BW FILE PHOTO

GLOBE TELECOM Inc.’s popular financial technology (fintech) app GCash may go public in the Philippines next year as it keeps the door open for new investors and an overseas listing.

“We want to do it sooner rather than later. Sometime in 2025 would be the best estimate I can give you,” Globe CEO Ernest Cu said in an interview on Wednesday. Mr. Cu chairs Globe Fintech Innovations Inc., or Mynt, the holding company of GCash and the entity that will do the initial public offering (IPO).

While the preference is to go public in the Philippines, Mr. Cu said the group is studying a dual listing, with the second IPO possibly in the US. “The rationale is trying to take advantage of the liquidity in the US market,” he said, citing limited trading volumes in the Philippines.

Mr. Cu declined to say the valuation that Globe is seeking for GCash and the amount that the company hopes to raise from the IPO. Mynt was valued at more than $2 billion after its last funding round in 2021.

While there’s no urgency for an IPO since GCash — which has 94 million users — is still growing and profitable, Mr. Cu said the company has “investors who would like to see some liquidity, so we may have to do it at some point.”

Globe owns around 35% of Mynt, while China’s Ant Group has about 34% stake, Mr. Cu said. Other investors include Warburg Pincus, Bow Wave Capital and Ayala Corp. Ant may hold on to its interest if Globe goes ahead with the GCash IPO, he added.

Ahead of the IPO, GCash has received “a lot of interest” from foreign funds, financial institutions and private investors to invest in the company. “The valuations are good so there’s temptation,” Mr. Cu said. “We are not ruling it out entirely.”

GCash forms part of Globe’s drive to become a tech-centric enterprise, diversifying from its maturing core telco business.

“There’s this paranoia that we have that one day this will plateau,” Mr. Cu said of the company’s telco revenue in an interview with Bloomberg TV’s David Ingles and Stephen Engle earlier on Wednesday. “Growth all over the world as far as telco revenues have been challenged. I think it’s no secret,” he added.

Globe reported a 3% increase in first-quarter service revenue to P41.1 billion ($708 million), the same growth it posted for all of 2023. But Globe’s share in Mynt’s equity earnings more than doubled to P962 million, representing 11% of its pre-tax income.

The company, which counts Singapore Telecommunications Ltd. and Philippine conglomerate Ayala Corp. as major shareholders, is also looking at sectors like healthcare and “others that we can sort of effect through digital means,” he said.

“Our fintech business, while profitable and growing tremendously, is still far behind in terms of revenue,” Mr. Cu said. — Bloomberg

Dining In/Out (05/23/24)

Celebrate Tea and Biscuit Days with M&S

WHILE International Tea Day on May 21 may have ended, it’s never too late to dunk a biscuit on National Biscuit Day on May 29, with treats from Marks & Spencer (M&S). The latest M&S flavored tea infusions are meant to please, whether hot for high tea or cold for summer days. Flavors available include Mango Pineapple, Lime and Raspberry Lemonade, and unique M&S Sticky Toffee Rooibos Infusion. As for National Biscuit Day, those who prefer a more traditional treat can look to the Outrageously Chocolatey Rounds, always in season. Other cookies are also available, with options that include chocolate, fruit, oats, or nuts. The teas and biscuits are available in Marks & Spencer’s 20 stores nationwide.

NWR has drink promos and live music

NEWPORT World Resorts (NWR) has several happy hour promos like 2-plus-1 San Miguel draft beers at Bar 360, El Calle Food and Music Hall, and The Grand Bar & Lounge between the hours of 6 and 9 p.m. this May. Forty drink selections await at The Whisky Library from 5 to 8 p.m. Meanwhile, Bar 360 at the G/F Newport Garden Wing plays host to a wide range of musical acts from pop to classic rock. Over at the second floor, the El Calle Food & Music Hall lends the stage to some of the metro’s acoustic acts. At the Newport Grand Wing, The Grand Bar & Lounge sets the vibe with groovy music and a classic Manila beat. For more information, visit www.newportworldresorts.com and follow @newportworldresorts on Facebook and Instagram, and @nwresorts on Twitter.

Nestlé relaunches Homebakers Club

NESTLÉ All Purpose Cream announced the upcoming relaunch of the Nestlé Homebakers Club, a virtual community designed to empower home bakers and enthusiasts to deepen their baking expertise and turn their passion and kitchen knowledge into a business of their own. The club’s inaugural virtual event series, “Bake to Basics,” premieres on May 23, following closely on the heels of World Baking Day (May 17). The event will feature a Facebook Live session hosted by chef Jackie Ang-Po, in collaboration with home baker and business owner Kathy Apole-Sarmiento. The session will cover essential baking techniques, gaining insights into starting a home baking business, and discovering the secrets to success in the industry. “Baking has the power to bring people together and ignite creativity,” said Ms. Ang-Po. The club offers a wide range of benefits, including access to exclusive content, online classes, expert advice, weekly challenges, and networking opportunities with industry professionals and fellow home bakers. Members will also have the chance to participate in the club’s offline events and activities, showcasing their skills and creations to a wider audience. Members can also initiate their own activities like meet-ups and sharing of culinary creations for mutual appreciation and constructive feedback. “Nestlé Homebakers Club is both a community and platform on baking and business for home bakers of varying levels to connect, learn, and thrive. We are committed to providing members with the resources and support they need to succeed. Whether you’re a seasoned baker or just starting out, Nestlé Homebakers Club is your go-to destination for inspiration, education, and collaboration,” said Carina Faustino-Dy, Senior Brand Manager of Nestlé All Purpose Cream. To join the launch on May 23, visit https://www.facebook.com/NestleHombakersClub.

DQ offers ube treats in May

DAIRY Queen’s (DQ) latest “Blizzard of the Month” offering is the Ultimate Ube collection, featuring seven treats available for a limited time only. The traditional combo of ube — purple yam – and cheese with the new Ube Cheesecake Blizzard, made with DQ’s signature soft serve mixed with real ube and bite-sized bits of cheesecake, and then topped with a ball of ube. Then there is the new Ube Fluff Blizzard, made with real ube and mini marshmallows mixed into soft serve, topped with a ball of ube and more mini marshmallows. Rounding off the new Blizzard flavors is the new Ube Crunch Blizzard, made with real ube and crushed graham crackers mixed into soft serve, which is then topped with a graham cracker and a ball of ube. The other items in the collection are: Purple Dream Parfait, made with ube topping between layers of soft serve, topped with cookie crunch and a ball of ube; the new Ube Classic Milk Shake, with soft serve blended with milk and real ube, and then topped with whipped cream; the new Purple Cloud Tin Cake, made with soft serve mixed with real ube, all resting on a cake crunch base/crushed Oreo base, which is then topped with white and purple frosting and mini marshmallows; and the new Purple Fudge Cheesecake, made with a cake crunch center, crushed Oreo base, and soft serve mixed with real ube and cheesecake bits, finished with purple frosting and ube topping and cheesecake bits. The Ultimate Ube Blizzards are available in mini, regular, medium, and large starting at P99. The Ube Classic Milk Shake is available in 12 and 16 oz servings starting at P169, while the Purple Dream Parfait is priced at P169. The Purple Cloud Tin Cake is priced at P439, while the Purple Fudge Cheesecake, available in 6- and 8-inch variants, starts at P749.

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