Inflation, labor shortages to delay recovery in business travel spending -industry forecast

August 16, 2022 | 1:49 pm

A recovery in global business travel spending to pre-pandemic levels is likely to be delayed by 18 months to 2026 because of factors like persistent inflation, high energy prices, labor shortages and lockdowns in China, a new industry forecast shows.

The Global Business Travel Association (GBTA) said business travel spending rebounded by 5.5% to $697 billion in 2021 with North America leading the recovery, but remained well short of 2019 levels of $1.4 trillion.

The recovery outlook is more pessimistic than GBTA’s last forecast issued a year ago, when it expected a full rebound to 2019 levels by 2024.

Environmental sustainability considerations and the regional impact of the war in Ukraine are also weighing on travel demand, the forecast said.

“The factors impacting many industries around the world are also anticipated to impact global business travel recovery into 2025,” GBTA CEO Suzanne Neufang said in a statement. “The forecasted result is we’ll get close, but we won’t reach and exceed 2019’s pre-pandemic levels until 2026.”

Global Business Travel Group Inc., owner of the world’s largest corporate travel agency American Express Global Business Travel, said last week that revenues this year were expected to average around 65% of 2019 levels, though that did not include the impact of a possible recession.

Airlines and hotels have been relying on strong leisure demand to help fill the gap left by the decline in corporate travel during the pandemic. – Reuters

Iran responds to EU nuclear text, seeks U.S. flexibility

August 16, 2022 | 1:43 pm

DUBAI – Iran responded to the European Union’s “final” draft text to save a 2015 nuclear deal on Monday, an EU official said, as the Iranian foreign minister called on the United States to show flexibility to resolve three remaining issues.

After 16 months of fitful, indirect U.S.-Iranian talks, with the EU shuttling between the parties, a senior EU official said on Aug. 8 it had laid down a “final” offer and expected a response within a “very, very few weeks.”

While Washington has said it is ready to quickly seal a deal to restore the 2015 accord on the basis of the EU proposals, Iranian negotiators said Tehran’s “additional views and considerations” to the EU text would be conveyed later.

The EU official on Monday provided no details on Iran‘s response to the text.

“There are three issues that if resolved, we can reach an agreement in the coming days,” Iranian Foreign Minister Hossein Amirabdollahian said earlier on Monday, suggesting Tehran’s response would not be a final acceptance or rejection.

“We have told them that our red lines should be respected … We have shown enough flexibility … We do not want to reach a deal that after 40 days, two months or three months fails to be materialized on the ground.”

The United States said the deal could only be revived if Iran dropped “extraneous” issues, an apparent reference to Tehran’s demands the U.N. nuclear watchdog close a probe into unexplained uranium traces in Iran and that its Revolutionary Guards come off a U.S. terrorism list. Read full story

Diplomats and officials told Reuters that whether or not Tehran and Washington accept the EU‘s “final” offer, neither is likely to declare the pact dead because keeping it alive serves both sides’ interests. Read full story

Mr. Amirabdollahian said that “the coming days are very important” and “it would not be end of the world if they fail to show flexibility … Then we will need more efforts and talks … to resolve the remaining issues.”

The stakes are high, since failure in the nuclear negotiations would carry the risk of a fresh regional war with Israel threatening military action against Iran if diplomacy fails to prevent Tehran from developing a nuclear weapons capability.

Iran, which has long denied having such ambition, has warned of a “crushing” response to any Israeli attack.

“Like Washington, we have our own plan B if the talks fail,” Mr. Amirabdollahian said.

In 2018, then-President Donald Trump reneged on the deal reached before he took office, calling it too soft on Iran, and reimposed harsh U.S. sanctions, spurring the Islamic Republic to begin breaching its limits on uranium enrichment.

The 2015 agreement appeared on the verge of revival in March after 11 months of indirect talks between Tehran and US President Joe Biden’s administration in Vienna.

But talks broke down over obstacles including Tehran’s demand that Washington provide guarantees that no US president would abandon the deal as Trump did. Read full story

Biden cannot promise this because the nuclear deal is a non-binding political understanding, not a legally binding treaty. – Reuters

Natural Gas: The key to clean energy transition

August 16, 2022 | 8:00 am

Reducing greenhouse gas (GHG) emissions is more crucial than ever. The United Nations Intergovernmental Panel on Climate Change’s (IPCC) latest report noted that average annual global GHG emissions in 2010-2019 were at their highest level in human history, yet the rate of growth has slowed. The IPCC said, “without immediate and deep emissions reductions across all sectors, limiting global warming to 1.5°C is beyond reach.”

Carbon dioxide (CO2) emissions are a significant GHG in the atmosphere, accounting for around 74% of the emissions, according to a data from Climate Watch. In 2021, from a report by the International Energy Agency (IEA), the global energy-related carbon emissions reached their highest level with 36.3 gigatonnes (Gt). And over 40% of the overall global carbon emissions growth that year was from coal, with its emissions also rising to an all-time high of 15.3 Gt.

Greater carbon emissions amassing and blanketing the planet lead to global warming and climate change. The Philippines is highly vulnerable to climate change. In the Climate Change Physical Risk Exposure Heatmap Rankings released by Fitch Ratings last year, the country ranked 4^th in terms of risks from floods and storms.

Preventing the worst impacts of climate change would require emissions to be reduced — nearly half by 2030 and reach net zero by 2050. Hence, this would need a cut in coal usage and instead go for cleaner alternatives, particularly renewables.

Renewable energy sources, such as the sun, wind, water, and geothermal heat, are replenished continually and release little to no GHG emissions. This shows their impact on reducing carbon emissions and addressing climate change.

But the transition to 100% renewable energy, while significant, is not easy to attain.

For First Gen Corporation, one of the leading clean and renewable power providers in the Philippines, the key to the country’s transition to 100% renewable energy is natural gas. First Gen considers natural gas an ideal partner and support for renewable energy.

“Natural gas acts as a bridge or transition fuel. Going 100% renewable can take time, so we make use of natural gas in the meantime given that it is reliable, flexible, and is the cleanest fossil fuel,” First Gen Vice President Julicer Alvis said.

The carbon emissions of coal plants are about 2.5 times that of combined cycle gas plants on a per ton/MWh basis. Natural gas also does not leave behind by-products such as ash, sludge, and other particulate matter that could be dangerous to people’s health and the environment.

When the sunlight or wind is not enough to produce solar and wind energy, natural gas plants can help and provide power in as fast as 15 minutes.

“It only takes minutes for a natural gas plant to start up, making it flexible enough to adjust to shifting power demands. Using natural gas with renewable energy, like solar, is the cleaner, better combination. When there is not enough sunlight, flexible gas plants can provide the supplemental power quickly, helping keep the lights on,” Mr. Alvis explained.

Natural gas would also continue to play a vital role in the shift to a decarbonized world for some time. According to Mr. Alvis, “Natural gas-fired plants will enhance energy security and resilience, and support the development of more variable renewable sources such as wind, solar, and hydro, in combination with storage.”

First Gen paved the way for the birth of the natural gas industry in the Philippines and is a leader in clean and renewable energy. It has four natural gas-fired power plants, which include the 1000-MW Santa Rita, the 500-MW San Lorenzo, the 97-MW Avion, and the 420-MW San Gabriel power plants.

The company is pioneering the development of a liquefied natural gas (LNG) terminal to introduce LNG to the country.

LNG would enable the company’s existing natural gas-fired plants to continue operating by initially supplementing and eventually even replacing the decreasing indigenous Malampaya gas reserves. Furthermore, the LNG terminal could serve as a hub that would support new large- and small-scale LNG opportunities to bring natural gas to different islands across the country.

“First Gen aims to actively pursue new, innovative, economically viable technologies that can further reduce the GHG emissions of natural gas, recognizing that it may otherwise become necessary to phase natural gas use down in line with decarbonization targets,” Mr. Alvis said.

Along with the production of power from natural gas, First Gen Corporation also provides wind, solar, hydro, and geothermal energy through its subsidiaries and several energy facilities located across the Philippines. It has been producing 3,495 megawatts of electricity and providing 19% of the country’s total energy consumption with clean energy as of Dec. 31, 2021, running absolutely on 0% coal power.

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Pandemic pushes 2.3 million Filipinos into poverty in 2021

August 16, 2022 | 12:34 am

slum-area-poverty — PEOPLE are seen living under the Culiat Bridge in Visayas Ave. in Quezon City, Sept. 29, 2020. — PHILIPPINE STAR/ MICHAEL VARCAS

By Bernadette Therese M. Gadon, Researcher

AROUND 2.3 million Filipinos have been plunged into poverty between 2018 and 2021, as the coronavirus pandemic left lasting scars on the Philippine economy, according to the Philippine Statistics Authority (PSA).

Preliminary results of the 2021 Official Poverty Statistics estimated poverty incidence among individuals — the proportion of Filipinos whose incomes fell below the per capita poverty threshold from the total population — rose to 18.1%, from the 16.7% recorded in 2018.

However, the figure fell short of the government’s goal to bring down poverty incidence to 15.5-17.5% in 2021.

The PSA said the number of Filipinos living in poverty rose by 2.322 million to 19.992 million in 2021, from 17.670 million in 2018.

Socioeconomic Planning Secretary Arsenio M. Balisacan attributed the rise in poverty incidence to the strict lockdowns implemented to contain the spread of the coronavirus disease 2019 (COVID-19).

“The effects of the COVID-19 pandemic, including income and employment losses, caused the poverty incidence to rise. Restrictions on mobility and low earning capacity of poor households due to limited access to regular and productive jobs made the lives of Filipinos difficult,” Mr. Balisacan said at a press briefing on Monday.

Despite this, Mr. Balisacan is optimistic the Marcos administration will be able to achieve its goal of bringing down the poverty rate to single digit or 9% by 2028.

“We can say that given the greater opening up of the economy in 2022, more reduction in the unemployment numbers and underemployment numbers in 2022, it’s likely that the poverty incidence would be lower, despite the uptick in inflation,” he said.

The poverty data were derived from the Family Income and Expenditure Survey (FIES), which was conducted in July 2021 and January 2022. It covered 165,029 families for both rounds of the survey.

The PSA said it will now conduct the FIES every two years, with the next survey in 2023.

SUBSISTENCE INDICENCE
Meanwhile, PSA data showed the subsistence incidence among Filipinos — the share of those individuals with per capita income below the per capita food threshold to the total population — also increased to 5.9% in 2021, higher than 5.2% in 2018.

In absolute numbers, this translated to 6.545 million Filipinos falling below the monthly food threshold in 2021, 1.005 million more than 5.541 million in 2018.

Also, poverty incidence among families with five members jumped to 13.2% in 2021, from 12.1% in 2018.

This meant around 492,000 families were plunged into poverty in 2021, bringing the total to 3.496 million from 3.005 million in 2018.

Subsistence incidence among families — the share of Filipino families in extreme poverty — also went up to 3.9% from 3.4% in 2018.

This was equivalent to 1.039 million families whose income fell below the food threshold, about 200,000 more than the 840,000 families in 2018.

The poverty threshold or poverty line is the minimum income required for an individual or a family of five to meet the basic food and non-food needs.

An average Filipino needed at least P2,406 per month to meet his or her basic needs in 2021 compared with P2,151 a month in 2018.

For a family of five, they would need around P12,030 a month from P10,756 per month in 2018.

Food threshold is the minimum income required for an individual or a family to meet the basic food needs, which satisfy the nutritional requirements for economically necessary and socially desirable physical activities.

The PSA estimated the food threshold at around P1,676 a month for an average Filipino from P1,511 in 2018.

For a family of five, it was estimated at around P8,379 a month, higher than P7,553 previously.

The income gap, which measures the average amount of income required by the poor to get out of poverty line, was estimated at 22.6% in 2021 from 21.7% in 2018.

This meant that incomes of poor families fell by 22.6% short of the poverty threshold. In other words, a family with five members needed an additional monthly income of about P2,719 to emerge from poverty in 2021.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said that while the pandemic was mainly the reason, inequality may also be a factor as to why poor Filipinos remained poor or became poor over the years.

“Even if growth in the Philippines was relatively strong, not all were benefiting from the gains and thus certain segments still struggled to get themselves out of poverty and or certain segments slipped more quickly back into poverty due to the lockdowns,” he said via e-mail.

“Higher inflation and lack of access to credit may have also been a key as vulnerable households may not find lifelines to get through to the next paycheck,” he added.

Analysts said that the new administration will have to come up with ways to provide support and to create more quality jobs to bring down poverty levels.

“More subsidies can really help. But its sustainability should be firmly supported by higher and efficient revenue collections by government… The challenge is increasing and propping up real investment that create real sources of incomes for Filipinos,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said.

Mr. Mapa said the Philippine economy faces a “triple threat of higher prices, rising interest rates, and a fiscal handicap that may limit the ability of the government to provide support.”

“What the administration does in the next few months and during the remainder of the young [six] years will determine where FIES will be in [three] years. Government officials must look to address the key issue of inflation and job creation at the soonest as this would pave the way for faster and more equitable growth,” he added.

AVERAGE INCOME SLIPS
Preliminary results of the FIES also showed the average income of Filipino households declined by 2% year on year to P307,190 in 2021 from P313,350 in 2018.

Average spending of Filipino families likewise dropped by 4.1% to P228,800 in 2021 from P238,640 in 2018.

Adjusted for inflation, Filipino families’ income averaged P282,080 in 2021, down from P313,350 in 2018.

Similarly, an average Filipino family spending amounted to P210,100 under 2018 prices, lower than P238,640 in 2018.

The Gini coefficient, which measures income inequality, dipped to 0.4119 in 2021 from 0.4267 in 2018. A Gini coefficient reading of 0 represents perfect equality, while 1 denotes perfect inequality.

Remittances hit 6-month high in June

August 16, 2022 | 12:33 am

US-dollars-currency-Remittance — A man counts dollar bills at a currency exchange shop in Manila, June 16. — PHILIPPINE STAR/KRIZ JOHN ROSALES

CASH REMITTANCES reached a six-month high in June, as overseas Filipino workers (OFWs) sent more money to help their families cope with rising inflation.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Monday showed cash remittances sent through banks stood at $2.75 billion in June, 4.4% up from $2.64 billion in the same month in 2021.

The amount is the biggest since the $2.99-billion remittances logged in December 2021.

The growth in cash remittances was also the fastest in seven months or since the 5.1% rise seen in November 2021.

“The expansion in cash remittances in June 2022 was due to the growth in receipts from land-based and sea-based workers,” the BSP said in a statement on Monday.

In June, remittances from land-based workers jumped by 4.9% year on year to $2.23 billion, while money sent by sea-based workers increased by 2.6% to $514 million.

For the first six months of 2022, cash remittances rose by 2.9% to $15.35 billion, from $14.91 billion in the comparable period last year.

“Overseas Filipinos may have sent more back home to help beneficiaries cover expenses given the rise in cost of living back home,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

Inflation accelerated to 6.1% year on year in June, from 5.4% in May and 3.7% a year ago as food and fuel prices soared. June inflation exceeded the Bangko Sentral ng Pilipinas’ (BSP) 2-4% official target range for a third straight month.

“However, whatever gains OFWs and their families may have due to more peso proceeds for their US dollars or foreign currencies may be offset or negated by higher inflation,” Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said in a note.

The peso’s depreciation against the US dollar in June may have encouraged OFWs to send more remittances. The peso closed at P54.975 on June 30, shedding P2.605 or 4.97% from its May 31 close of P52.37.

“This suggests that even with the favorable exchange rate, OFWs are still sending home more remittances, possibly due to surging inflation and more expenses such as the impending return to school,” Mr. Mapa said.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the uptick in remittances may have been caused by the weaker peso, which encouraged OFWs to send more remittances.

“I also think that the return-to-school costs may also have something to do with it,” he said.

For public schools, the school year will start on Aug. 22.

Meanwhile, BSP data showed first-half cash remittances were driven mainly by higher inflows from the United States, Saudi Arabia, Japan, Qatar, and Singapore.

By country, the United States, Singapore, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Canada, Korea, Qatar, and Taiwan, accounted for 79.4% of total cash remittances in the first semester.

According to the BSP, personal remittances, which included inflows in kind, rose by 4.4% to $3.06 billion from the $2.94 billion posted in June 2021.

This brought personal remittances 2.8% higher to $17.09 billion in the first half of the year, from the $16.61 billion recorded in the comparable period in 2021.

“We’re expecting remittances to grow despite the external environment challenges. We may see inflows growing within the range of 1-4% in the coming months and average between 2-4% this year,” Mr. Asuncion said.

However, Mr. Ricafort said a likely recession in the United States could hurt OFWs in the coming months.

“Going forward, the risk of recession in the US, which is the world’s largest economy, could potentially reduce jobs or employment prospects for OFWs and could also potentially slow down OFW remittances,” Mr. Ricafort said.

The central bank expects remittances to grow by 4% this year. — Keisha B. Ta-asan

Vehicle sales up 29% in July

August 16, 2022 | 12:32 am

vehicles-cars — Motorists ply the northbound lane of EDSA in Pasay City before dawn, Aug. 14. — PHILIPPINE STAR/ MIGUEL DE GUZMAN

VEHICLE SALES jumped by 29% in July, as the economy continues to recover from the coronavirus pandemic, an industry report showed.

In a joint report released on Monday, the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) said new motor vehicle sales stood at 27,813 units in July, 29% up from 21,498 units sold in the same period a year ago.

“The double-digit sales growth recorded in July driven by higher demand for new motor vehicles brings a high degree of confidence for continued recovery of the auto industry. This mirrors the improvement on the consumer outlook for big-ticket items based on the government report,” CAMPI President Rommel R. Gutierrez said in a statement.

Sales of commercial vehicles surged by 49% to 21,467 units in July, from 14,396 units in the same month a year ago. This was attributed to double-digit rise in sales of light commercial vehicles (39.9%) and Asian utility vehicles (55.3%).

Month on month, commercial vehicle sales inched up by 1.5%.

The strong sales in commercial vehicles helped offset the 10.6% decline in passenger car sales to 6,346 units in July, from 7,102 units in the same month in 2021. Car sales shrank by 14.90% month on month.

In the first seven months of the year, CAMPI-TMA members sold a total of 182,687 units, 18.4% higher than the 154,265 units sold a year ago.

This was mainly due to the 31% rise in sales of commercial vehicles to 137,338 units during the seven-month period. Sales of light commercial vehicles surged by 36.2% to 108,660 units, while Asian utility vehicles went up by 18.5% to 23,285 units.

However, passenger car sales remained lackluster, dropping by 8.4% to 45,349 units in the January to July period.

Mr. Gutierrez remained optimistic about the industry outlook for the rest of the year.

“The improvement in the availability of jobs and employment, business recovery, and containment of the pandemic are important drivers for the overall economic recovery in this post pandemic normalcy — similarly true for the industry’s recovery as well,” Mr. Gutierrez, who is also first vice-president at Toyota Motor Philippines Corp. (TMP), said.

TMP continued to dominate the market with a share of 51.47% in the first seven months of 2022. TMP sold 94,026 units during the period.

Mitsubishi Motors Philippines Corp. had the second-biggest market share at 14.10%, with sales of 25,761 in the January to July period.

Nissan Philippines ranked third with a market share of 7.06%, with sales of 12,893 units.

In fourth place was Suzuki Philippines which had a 6.25% share, after selling 11,413 units.

Ford Motor Philippines ranked fifth with a market share of 5.89%, with sales of 10,753 units. — R.M.D.Ochave

NEDA aims to release new PDP before December

August 16, 2022 | 12:31 am

slum area — PHILIPPINE STAR/ MICHAEL VARCAS

THE NATIONAL Economic and Development Authority (NEDA) is working to fast-track the submission of the Philippine Development Plan (PDP) 2023 to 2028 before its deadline in December, an official said.

“We’ll see how we can fast-track,” NEDA Undersecretary Rosemarie G. Edillon told reporters on Monday.

In his first State of the Nation Address on July 25, President Ferdinand R. Marcos, Jr. told NEDA to come up with the new PDP not later than yearend.

Socioeconomic Planning Secretary Arsenio M. Balisacan on Monday said that the overall goal of the next PDP is reinvigorating job creation and poverty reduction.

He said they will focus on the full reopening of the economy; more investments in human capital, social development, and social protection; and the transformation of production sectors “to generate more and quality jobs and competitive products.”

“We are changing the way our labor market responds to growth. That is, we are not just creating more jobs but we tend to improve the quality of jobs by looking at those sectors that have high potentials for generating high-quality jobs,” Mr. Balisacan said, citing manufacturing, tourism, services, creatives, and agriculture industries.

For agriculture, Mr. Balisacan said “we will work toward[s] improving a yield or profit-per-hectare indicators in the farm sectors. That way we can reduce the pressure on prices for our population, as well as our industries.”

Global commodity prices have surged in recent months due to the ongoing Russia-Ukraine war and supply chain disruptions. Prices of wheat and fertilizer have soared amid tight global supply, putting pressure on the domestic agriculture industry.

Inflation stood at 6.4% in July, bringing the seven-month average to 4.7%.

The government set its inflation rate assumption to 4.5-5.5% for 2022, reflecting the impact of soaring transport, fuel, and food expenses.

The PDP serves as the government’s overall guide in development planning. The new PDP being created by the NEDA is also anchored in an 8-point socioeconomic agenda that includes ensuring food security, reducing transportation and logistics costs, and bringing down the high cost of power.

The near-term agenda also includes mitigating the scarring impact of the pandemic by addressing learning losses and strengthening social protection, as well as ensuring sound macroeconomic fundamentals by improving bureaucratic efficiency.

The PDP coincides with the government’s medium-term fiscal strategy which aims to attain 6.5-7.5% gross domestic product (GDP) growth this year, and 6.5-8% next year until 2028.

GDP growth averaged 7.8% in the first half, with Mr. Balisacan saying that the economy needs to grow by 7.2% for the remainder of the year to reach the upper end of the target. — Diego Gabriel C. Robles

Sia’s listed firms post double-digit profit growth

August 16, 2022 | 12:12 am

By Justine Irish D. Tabile

THREE listed companies chaired by businessman Edgar J. Sia II reported on Monday double-digit profit growth in the first semester led by his retail store operator MerryMart Consumer Corp., which nearly doubled its earnings during the period.

Real estate firm DoubleDragon Corp. posted a 29% increase in its consolidated net income to P1.2 billion for the six months ended June as revenues rose by 26.8% to P3.41 billion.

In a press release, Mr. Sia said the company’s equity “that consists generally of a string of diversified titled hard real estate assets located in prime and strategic locations nationwide continue to appreciate as years go by.”

Its consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) went up by 32% to P2.07 billion.

To date, the company has 1.2 million square meters of completed gross floor area all over the country.

“We expect this portfolio of hard assets to all mature and generate the optimum level of recurring income production before 2025,” Mr. Sia said.

The company is preparing for the planned real estate investment trust listing of its CentralHub industrial warehouse portfolio, which will commence once market conditions improve.

In the last quarter of the year, DoubleDragon plans to construct Hotel 101 – Niseko in Hokkaido, Japan.

“We believe that DoubleDragon’s current overall healthy financial position during this extended economic crisis puts it in a good position to grow and strengthen even more significantly once the next boom cycle starts,” DoubleDragon Chief Investment Officer Hannah Yulo-Luccini said.

Meanwhile, DDMP REIT, Inc. registered a P1.06-billion core net income in the first six months, higher by 17% than last year’s.

Its revenues went up by 2.9% to P1.23 billion while its rental income climbed by 7.6% to P1.14 billion in the first half.

DDMP, which invests in income-generating real estate, ended the semester with its total assets and equity increasing by 0.2% to P50.30 billion and to P41.04 billion, respectively.

Its board of directors approved a cash dividend to all shareholders amounting to P486.7 million or P0.03 per share with the payment date on Sept. 26, 2022.

“We are glad for the many positive economic indicators that are recently signaling a new economic cycle post the COVID-19 (coronavirus disease 2019) pandemic, post the peak of Ukraine war tensions, and post the generally peaceful Philippine election. These past few weeks, we have felt the buildup of fresh new tenant inquiries, ongoing negotiations and increased activities of the existing office and retail tenants,” Mr. Sia said.

MerryMart, which has several retail formats, posted a net income of P32.25 million in the first half, almost double from a year ago, driven by its acquisitions of Carlos SuperDrug and Cecile’s Pharmacy.

The group is keeping its eyes open for similar partnerships and acquisitions within traditional and technology consumer sectors.

MerryMart’s topline increased by 55.9% to P2.88 billion in the semester while its EBITDA climbed to P99.45 million, a 62.5% increase from last year.

Mr. Sia said the company “is well on its way to exceed the P5-billion revenue mark this year, more than double the company’s revenue numbers two years ago when it filed for [an initial public offering].”

He said the “next immediate goal” for the retail group is to double the figure “to reach our next milestone target,” which he disclosed as reaching the P12-billion revenue mark.

The company is set to launch an application called “MM Wholesale App” that will be available on iOS and Android devices.

The application will offer next-day delivery within Metro Manila, Bulacan, Rizal, Laguna, and Cavite along with free delivery for purchases amounting to P10,000 and above. It will have a point system that customers can use “good as cash” on their next purchase.

“One main feature of the App is its live inventory ability. Whatever you see in the App is physically in our warehouse which means 99% of the time you will receive exactly what you ordered,” Mr. Sia said.

The application will feature over 5,000 household essential SKUs (stock keeping units) priced 15% lower than retail prices.

By 2030, MerryMart aims to have a total of 1,200 branches nationwide and to generate P120 billion in system-wide recurring consumer sales revenue.

On the stock market on Monday, DoubleDragon shares went down by 1.05% or P0.08 to P7.51 apiece, DDMP shares climbed by 1.99% or P0.33 to P1.54 apiece, and MerryMart went up by 6.21% or P0.06 to P1.54 apiece.

Villar-led companies post lower income

August 16, 2022 | 12:11 am

THREE Villar-led companies — Golden MV Holdings, Inc., AllHome Corp., and AllDay Marts, Inc. — reported lower earnings in the second quarter as their revenues declined.

Golden MV posted a lower attributable net income of P259.35 million in the second quarter, down 6.5% from last year’s P277.41 million. This is a 39.4% decline from the P428.18 million recorded income in the earlier quarter.

Revenues were also lower, totaling P1.03 billion, a 14.6% decline from P1.2 billion last year.

Year to date, the company’s income was a bit higher at P687.52 million, or 4.6% more than the P657.59 million recorded last year.

Its first-half topline was lower by 6.1% to P2.57 billion from the P2.74 billion generated a year ago.

AllHome registered a 15.7% decline in second-quarter net profit to P250.02 million from the previous year’s P296.76 million. This is a reversal from the recorded net loss of P27.91 million in the first quarter.

The company’s topline fell by 3.4% to P3.03 billion from the P3.13 billion recorded last year.

Year to date, its profit was almost three times lower at P222.11 million, down from P640.97 million in the previous year.

Its first-half top line was also lower at P6.27 billion, a 6.8% decline from P6.72 billion last year.

AllDay Marts posted a net profit of P87.21 million in the second quarter, 19.5% lower than the previous year’s P108.32 million.

This is a complete reversal from last quarter’s P75.58-million net loss.

The company’s sales slipped by 2.5% to P2.3 billion from the P2.36 billion a year ago.

Year to date, the company’s profit declined 93.5% to P11.63 million from P179.64 million in the previous year.

Meanwhile, its first-half topline climbed by 2.2% to P6.27 billion from P4.49 billion last year.

On Monday, Golden MV shares closed unchanged at P670 apiece; AllHome shares went down by 0.56% or P0.03 to P5.33 each; and AllDay stocks climbed by 2.78% or P0.01 to P0.37 apiece. — Justine Irish D. Tabile

Ayala Corp. president and CEO takes leave of absence

August 16, 2022 | 12:10 am

FERNANDO Zobel de Ayala has taken a temporary medical leave of absence as Ayala Corp.’s president, chief executive officer (CEO) and vice-chairman of the board, the listed conglomerate said on Monday.

“He remains a member of our Board but has stepped down as member of our Executive Committee and Finance Committee,” the company said in a disclosure on Monday.

Ayala’s Corporate Governance and Nomination Committee endorsed Cezar “Bong” P. Consing for the posts and was elected as acting president and chief executive officer by the company’s board of directors at a meeting held on Aug. 14.

Mr. Consing has been a director of Ayala since December 2020. He is also a director of Bank of the Philippine Islands (BPI), Globe Telecom, Inc., and ACEN Corp.

He was a senior managing director of Ayala and president and CEO of BPI from 2013 to 2021.

Mr. Consing also served as chairman and president of the Bankers Association of the Philippines and as president of Bancnet, Inc.

Meanwhile, the company’s board elected Delfin “Del” L. Lazaro to take Mr. Zobel’s post as the vice-chairman of the executive committee.

Mr. Lazaro has been a non-executive director at Ayala since January 2007. He is a director at Integrated Micro-Electronics, Inc., Globe Telecom, and an independent director at Monde Nissin Corp.

He is also an independent adviser to the board of directors of Ayala Land, Inc. and a member of the BPI advisory council.

“I want to assure everyone that Fernando is in high spirits, but he has asked for some time to focus on his health and recovery,” Ayala Chairman Jaime Augusto Zobel de Ayala said in a Facebook post on Monday.

“Let us all give Fernando the support he needs to focus on improving his health, and Bong and Del our confidence as they take on their new roles,” he added. — Justine Irish D. Tabile

Globe’s credit profile seen to improve over next 6-9 months

August 16, 2022 | 12:09 am

GLOBE Telecom, Inc.’s credit profile is expected to improve over the next six to nine months, financial research firm CreditSights, Inc. said, citing the company’s “improving credit story.”

“We see potential for Globe’s deleveraging and capex (capital expenditure) funding buffer to enlarge from recently approved P32-billion equity rights offering (and) P80-90-billion tower sale…, (which) is expected to be completed by (the end of the year),” CreditSights said in its latest outlook report for Globe.

With these developments, the research firm anticipates “further improvements in Globe’s credit profile over the next six-nine months.”

Globe announced on Friday last week that it signed two sale and leaseback agreements for 5,709 telecom towers and related passive telecom infrastructure for over P71 billion.

It said that P53.5 billion of the proceeds will be used for capex and other major infrastructure expansions, with the remaining P17.7 billion going toward debt servicing.

“The first portfolio being sold consists of 2,180 telecom towers in Luzon, which will be acquired by MIESCOR Infrastructure Development Corp. for a total consideration of P26 billion, and leased back to Globe for an initial period of 15 years,” the Ayala-led company said in a statement.

The expected pre-tax transaction gain from the first portfolio will be P10.6 billion.

The second portfolio consisting of 3,529 towers will be sold to Frontier Tower Associates Philippines, Inc. for P45 billion, and also leased back over an initial period of 15 years. Pre-tax gain will be P15 billion.

It is in “advanced discussion” with another tower company for the sale and leaseback of an additional 1,350 telecom towers and related passive telecom infrastructure.

“We maintain our outperform recommendation on Globe, as we believe that its modest… growth and credit profile improvement prospects should cushion the credit risks from its sizable (2022) capex,” CreditSights said.

“Valuations are currently attractive in our view too.”

Outperform, according to finance website Investopedia, means “the company will produce a better rate of return than similar companies, but the stock may not be the best performer in the index.”

“We believe Globe’s hefty (2022) capex of P89 billion is sufficiently funded for, which should reduce the need for additional debt incurrence,” CreditSights added.

According to the research firm, its report is for informational purposes only. “Neither the information contained in this report, nor any opinion expressed therein is intended as an offer or solicitation with respect to the purchase or sale of any security or as personalized investment advice.”

Globe Telecom shares closed 3.57% higher at P2,320 apiece on Monday. — Arjay L. Balinbin

Gotianun firms’ net income declines

August 16, 2022 | 12:08 am

GOTIANUN-LED Filinvest Development Corp. (FDC) reported a 34.2% decline in its attributable net income to P1.47 billion in the second quarter after incurring high operating costs and expenses.

The company’s topline was up by 20.1% to P16.24 billion in the second quarter from the recorded P13.52 billion last year.

FDC’s costs were up by 31.7% in the second quarter to P6.74 billion while its expenses rose by 12.2% to P8.25 billion.

In the first half, FDC’s net income went down by 47% to P2.23 billion from P4.2 billion last year.

Its revenues, however, went up to P30.81 billion, an 11.2% increase from last year’s P27.7 billion.

“Core revenues registered a year-on-year growth of 11.2% […], largely contributed by the core revenue increase in real estate segment, hospitality business and power and utility operations,” the company said in its quarterly report on Monday.

Its subsidiary, Filinvest Land, Inc. (FLI), registered a P526.98-million attributable net income for the three months ended June, 39.3% lower than P868.11 million a year ago.

FLI’s total revenue amounted to P4.67 billion in the second quarter, higher by 16.2% than the P4.02 billion last year.

Its costs from real estate sales went up by 6.3% to P1.79 billion while costs from rental services were up by 20.5% to P687.46 million.

Operating expenses were also up, with selling and marketing expenses amounting to P298.74 million and general and administrative expenses totaling P518.89 million.

Year to date, FLI’s net income slipped to P1.2 billion, 54% lower than year-ago’s P2.62 billion.

On the stock market on Monday, FDC shares went down by 0.99% or P0.07 to P7 apiece while FLI shares ended unchanged at P0.93 apiece. — Justine Irish D. Tabile

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