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AboitizPower eyes 1,000-MW gas-fired plant

By Angelica Y. Yang, Reporter

ABOITIZ Power Corp. is considering putting up a 1,000-megawatt (MW) gas-fired power plant within the next decade to provide baseload capacity for the electricity grid, its top executive said on Wednesday.

“For baseload, we are shifting our focus to gas. We have early feasibility studies and within the next 10 years, we’re open to an option of building one gas plant with a capacity of at least 1,000 megawatts, unless a cleaner technology [proves] to be [a] more viable option,” AboitizPower Chief Executive Officer and President Emmanuel V. Rubio said on Wednesday.

He made the statement during an online forum organized by the Economic Journalists Association of the Philippines and Aboitiz Equity Ventures, Inc.

He noted that gas technology remains the “only visible cost-competitive technology” at the moment.

“I don’t think coal or new coal [plants] will be built, given all the pressures on the environment and the lack of financing. We’re not closing our doors on any alternative technology that will be able to provide the same capacity factor on a cost-competitive [basis],” Mr. Rubio added.

AboitizPower’s plan comes around four months after he said that the company was considering gas-related projects in Luzon. He had said that a team in the firm was conducting early feasibility studies on building gas plants in “at least two locations.”

During the event, he also provided an update on the timeline of the commissioning of the power firm’s 1,336-MW supercritical coal-fired power plant under GNPower Dinginin Ltd. Co. in Mariveles, Bataan.

The plant’s schedule was further pushed back due to construction delays caused by travel restrictions.

Mr. Rubio expects the plant’s unit 1 to be synchronized with the grid between Aug. 16 to 19.

“Hopefully, [it will be there] to alleviate the supply situation when Malampaya [natural gas facility] goes on outage in October, and we can go straight to what we’re expecting to be the issuance of a CoC (certificate of compliance) from ERC (Energy Regulatory Commission) by around third week of September,” he said.

He added that unit 2 of GNPower Dinginin is targeted to be ready for commissioning by March of next year.

Last week, the Aboitiz-led energy firm announced that it will be spending P190 billion to build new renewable energy (RE) projects over the next decade. The development of these projects is in line with its goal to reach a 50-50 power generation mix from its renewable and thermal capacities.

AboitizPower is the holding company for the Aboitiz group’s investments in power generation, distribution, and retail electricity services. It describes itself as the largest owner and operator of RE based on installed capacity.

Shares in AboitizPower shed 0.42% or 10 centavos to close at P23.70 apiece at the stock exchange on Wednesday.

Shakey’s trims losses to below P15M as revenues rise by 37%

SHAKEYSPIZZA.PH

SHAKEY’S Pizza Asia Ventures, Inc. (SPAVI) trimmed its net loss to P14.71 million in the second quarter as it recorded higher revenues.

SPAVI said in a stock exchange disclosure on Wednesday that its total comprehensive loss for the April-to-June period is an improvement from the P403.54-million total comprehensive loss posted a year ago.

Revenues of the company during the quarter rose 36.9% to P1.27 billion. Of the total, net sales amounted to P1.21 billion while royalty and franchise fees contributed P61.89 million.

SPAVI’s system-wide sales for the quarter rose 43% to P1.63 billion, while costs of sales also increased 13.1% to P1.02 billion.

For the first half of the year, SPAVI recorded a P14-million net income, a reversal of the P289.96-million net loss it had in the same period last year.

Revenues of the company for the January-to-June period fell 7.6% to P2.55 billion from P2.76 billion. Of the total, net sales accounted for P2.43 billion while the remaining P116.25 million came from royalty and franchise fees.

SPAVI said its system-wide sales during the first half reached P3.3 billion, 4% lower than the P3.45 billion it had in 2020. Costs of sales also dropped 13% to P1.98 billion.

“Earnings before interest, tax, depreciation, and amortization (EBITDA) for the first six months of the year stood at P404 million. EBITDA margins reverted to a double-digit level of 15.9%, a significant improvement from last year’s 6.5%,” SPAVI said.

Vicente L. Gregorio, SPAVI President and Chief Executive Officer, said the company’s first-half performance shows the resilience and relevance of its brands amid the pandemic.

“We were able to leverage our industry-leading margins and operating capabilities to strategically pivot our growth plans and cost structures. The efforts, prudence, and discipline built amidst extreme challenges helped us weather through the past 15 months,” Mr. Gregorio said.

“We are still very much in uncertain times; thus, we remain cautiously optimistic, anticipating uncertainties that may potentially delay the path to recovery,” he added.

SPAVI opened 16 new outlets in the first half, which brought its total store network count to 295 stores. The new stores have smaller footprints and lower investment requirements ensuring short payback period and high capital returns.

Amid the return of some areas to stricter lockdown protocols, Mr. Gregorio expects the impact to be partially cushioned by the sustained growth in the company’s off-premise business.

“More importantly, we are encouraged that the vaccination rollout in the country has been ramping up in the past few months. We hope this will increase mobility and boost consumer confidence to fuel our recovery,” Mr. Gregorio said.

“In these tough times, we strive to keep Shakey’s standing as a trusted chain of top-of-mind food brands. Central to this is the expansion of our store network, value creation for our guests, and investments in our off-premise presence,” he added.

On Wednesday, shares of SPAVI at the stock exchange ended flat at P7.90 each. — Revin Mikhael D. Ochave

Converge more ready for lockdowns this year, says chief strategist

LISTED fiber broadband provider Converge ICT Solutions, Inc. said it is better prepared for this year’s stricter lockdowns than it was last year, with some policies in place to ensure the uninterrupted rollout of its network.

“Now, I think we’re much better prepared. We [now] know how to talk to homeowners’ associations (and) LGUs (local government units) to get permits,” Converge Chief Strategy Officer Benjamin Rex E. Azada said at an online forum on Wednesday organized by the Economic Journalists Association of the Philippines.

“In some places, it’s much better. In some places, there are still challenges,” he added.

Mr. Azada recalled that Converge’s installation and repair activities were hampered by the implementation of stricter community quarantine rules last year.

In July, the Anti-Red Tape Authority said it was considering proposing new rules that would speed up the issuance of permits for telecommunications underground works.

The agency said that a draft joint memorandum circular could streamline permits for the installation of poles, excavation to lay down underground fiber ducts, and the attachment of aerial and underground broadband cables on physical infrastructure.

As for Converge’s growth, Mr. Azada said: “We believe that the trajectory [or] the momentum for our business continues to be there, especially in the residential area.”

“We continue to believe that the market for telecommunications services, particularly fixed broadband [or] high-speed reliable broadband is highly underserved,” he noted.

“As of last year, fiber penetration was just a bit more than 10%, so it’s a wide space for Converge and other players. There’s massive… demand, and all the players really need [is] to do their best.”

Converge saw its attributable net income for the first three months of the year nearly tripled to P1.55 billion from P573.60 million in the same period last year.

Total revenues, which include contributions from residential and enterprise segments, increased 83.2% to P5.55 billion in the first quarter from P3.03 billion in the same period in 2020.

Converge ICT shares closed 1.86% higher at P27.35 apiece on Wednesday. — Arjay L. Balinbin

AC Energy’s maiden solar farms in India go online

AYALA-LED AC Energy Corp. said on Wednesday that its two maiden solar farms with an aggregate capacity of 210 megawatts peak (MWp) have begun commercial operations in India.

The two facilities are the 140-MWp Sitara Solar plant in the Jodhpur district of the Rajasthan state, and the 70-MWp Paryapt Solar project in the Amreli district of the Gujarat state.

In a statement on Wednesday, AC Energy said that it had invested $100 million to develop the two solar farms along with its partner UPC Solar Asia-Pacific (UPC-AC).

AC Energy and UPC-AC built the plants through joint venture firm UPC-AC Energy Solar, a firm that focuses on the development and operations of solar projects in the Asia-Pacific region.

The two solar farms are made up of over 466,000 solar panels that can produce 358 gigawatt-hours annually, while avoiding an estimated 323,990 metric tons of carbon dioxide equivalent.

“The milestone was no small feat given the worsening pandemic situation in India, where the COVID-19 (coronavirus disease) variant caused mass devastation, slowed the economy, and disrupted supply chains,” AC Energy said.

In July last year, UPC-AC Energy Solar broke ground for Sitara Solar, which aims to supply power to Solar Energy Corp. of India. The joint venture company embarked on the construction of Paryapt Solar in Gujarat, known as one of the first states to generate power from solar in India.

“We are pleased to commission these two projects on time and within the construction budget despite many challenges due to COVID-19 pandemic delays and rising material costs… With our initial successes on hand, we are aiming to have about 1 GW (gigawatt) (of) operating solar asset in India by 2023,” said UPC-AC Energy Solar Chief Executive Officer Pranab Kumar Sarmah.

For AC Energy International Chief Operating Officer Patrice R. Clausse, the venture marks a major milestone that “strengthens the firm’s position” in India’s renewable energy (RE) space.

“As we expand our renewables footprint in the region, we remain fully committed in helping India achieve their sustainable energy goals, and aid in the country’s socio-economic progress, especially during these challenging times,” he said.

According to AC Energy, UPC-AC Energy Solar is preparing to build 420 MWp more of solar assets in the country within the year.

The listed energy platform of the Ayala group has an attributable capacity of around 2,600 MW in the Philippines, Vietnam, Indonesia, India and Australia.

The company hopes to become the largest listed renewables platform in Southeast Asia, as it moves towards its goal to hit 5,000 MW of RE capacity by 2025.

On Wednesday, shares in AC Energy improved by 1.65% or 15 centavos to finish at P9.22 apiece at the stock exchange. — Angelica Y. Yang

D&L Industries scores 134% profit growth as units recover

D&L Industries, Inc.’s net income for the second quarter grew by 134% to P671 million from last year’s 287 million as all of its business segments “posted significant recovery,” it said on Wednesday.

It is also one percent higher than its P665-million net income in the same period in 2019.

“Our strong earnings recovery in the second quarter suggests that things are much better compared to last year,” D&L President and Chief Executive Officer Alvin D. Lao said in a statement.

“It also demonstrates the essential nature and the resiliency of our underlying businesses,” he added.

D&L manufactures customized food ingredients, specialty raw materials for plastics, and oleochemicals for personal and home-care use.

The company saw a 53% growth in net sales in the second quarter to P6.90 billion from P4.50 billion year on year. Meanwhile, its gross profit went up by 63% to P1.14 billion from P703 million.

In the first six months, D&L’s net income grew by 74% to P1.4 billion from last year’s P802 million. Sales amounted to P13.91 billion, 37% more than the P10.17 billion logged in the same period in 2020.

D&L’s food ingredients segment income in the second quarter grew by 672% year on year and is said to already be at par with its income level in 2019. For the first half, it grew by 141% compared with the same period last year.

“Near to medium-term outlook for the food ingredients business is encouraging as it stands to benefit directly from higher consumer spending during Christmas and election season,” the company said.

Meanwhile, income from its specialty plastics business improved by 52% in the first semester due to higher volume for polymers, colorants, and additives. It finished the period with a 41% growth in total segment volume.

“The company expects steady and consistent demand moving forward given the crucial role that plastics play during the current pandemic — from various medical applications to packaging for parcel delivery,” D&L said.

Total volume for its consumer products, which was previously referred to as Aerosols, grew by 60% as net income for the segment went up by 39% in the first half. Meanwhile, the Chemrez segment saw a 37% growth in earnings as volumes also grew by 30%.

The company said it sees its export business as a “bright spot,” with revenues for the segment up by 70% in the first half to P4.5 billion from P2.7 billion. Coconut-based products were said to be main drivers of its export growth.

“For the rest of the year, if things can be managed well [with COVID, the Delta variant, etc.], then we should see second-half performance be at around the same levels as the first half,” Mr. Lao said in an e-mailed response to BusinessWorld.

“The pandemic showed us that it doesn’t hurt to continue to be careful and conservative as a business. We are still willing to take risks, but these have to be well-planned and thought out as much as possible,” Mr. Lao said.

On Wednesday, D&L shares inched down by 0.36% or three centavos to close at P8.32 each at the local bourse. — Keren Concepcion G. Valmonte

PAL resumes services to UK with special flights

PHILIPPINE Airlines (PAL) announced on Wednesday the resumption of its services to the United Kingdom, with special flights between Manila and London on Aug. 10 and 24, Sept. 7 and 21, and Oct. 5.

“The new flights mark the return of the Philippines’ sole nonstop link to Western Europe more than seven months after PAL suspended London flights last December 23 after the [government] imposed severe restrictions on inbound travel from the UK,” the flag carrier said in a statement.

The airline said all flights will operate nonstop.

PAL said that the scheduled special flights could pave the way for the airline to resume more regular weekly flights to London “if demand can be sustained.”

The flag carrier noted that the UK is home to 200,000 Filipinos.

The UK was also the “top generator of European visitors to the Philippines before the global pandemic, with approximately 209,000 UK residents visiting in 2019,” it said.

“A return to daily or multiple weekly flights will ultimately depend on a careful evaluation of the market situation as the pandemic recedes,” PAL added. — Arjay L. Balinbin

Cebu Air plans ‘staff right-sizing’ anew

BW FILE PHOTO

CEBU Air, Inc., the listed operator of budget carrier Cebu Pacific, may further reduce its workforce as part of efforts to mitigate the impact of the global health crisis on its operations.

“The group believes that it remains a resilient airline despite the adverse impact” of the coronavirus pandemic,” Cebu Air said in its second-quarter report released on Wednesday.

“It is further engaged in the planning [of] staff right-sizing in addition to further optimization and digitalization of processes,” the company added.

Candice A. Iyog, Cebu Pacific vice-president for marketing and customer service, said in March that the budget carrier laid off 30%, or “around 1,300,” of its total workforce last year.

The low-cost carrier operator reported P6.5 billion in second-quarter net loss attributable to parent firm equity holders, compared with a net loss of P8 billion in the same period a year earlier.

Total revenues for the quarter surged 128.6% to P3.2 billion from P1.4 billion previously.

Broken down, second-quarter passenger revenue jumped 862% to P1.1 billion, while cargo revenue rose 25% to P1.5 billion. Ancillary revenue surged 495.8% to P557.1 million.

The attributable net loss for the first half of the year was P13.8 billion, compared with a net loss of P9.1 billion in the same period in 2020.

First-half revenues dropped 65.9% to P5.9 billion from P17.3 billion previously.

Passenger revenue for the first six months decreased 82.6% to P2 billion, while revenue from the cargo segment grew 27.3% to P2.8 billion. Ancillary revenue for the period declined 69.4% to P1.1 billion.

Cebu Air expects that the public health crisis would have a “material impact” on its net sales, revenues, income from operations and future performance.

“Given the volatile nature of this situation and the uncertainty as to when operating and demand conditions will improve, it will be premature to provide any guidance with respect to expected impact in succeeding periods,” it noted.

The company’s options to mitigate the impact of the crisis include “negotiations with key suppliers on its capital expenditure commitments and related cash flows.”

“The group’s capital expenditure commitments relate principally to the acquisition of aircraft fleet, aggregating to P162.5 billion and P154.1 billion as of June 30, 2021, and Dec. 31, 2020, respectively,” it said.

Cebu Air is set to take delivery of 16 A330 NEO aircraft, 12 A321 NEO aircraft, 16 A320 NEO aircraft, 10 A321XLR aircraft, and three ATR 72-600 aircraft until 2027.

Cebu Air shares closed 0.44% lower at P45.30 apiece on Wednesday. — Arjay L. Balinbin

Robinsons Land’s REIT gets PSE approval

THE real estate investment trust (REIT) sponsored by Robinsons Land Corp. (RLC) has received the go signal from the Philippine Stock Exchange (PSE) for its initial public offering (IPO).

RLC said on Wednesday that RL Commercial REIT, Inc. (RCR) will be offering to the public up to 3.34 billion common shares for P7.31 each at most, with an over-allotment option of around 305 million common shares. The IPO targets to raise as much as P26.7 billion.

RCR aims to conduct its offer period from Aug. 25 to Sept. 3. Its PSE listing is tentatively scheduled for Sept. 14. Its shares will be listed under the ticker symbol “RCR.”

The company has 14 commercial real estate assets in its initial portfolio, with a total gross leasable area (GLA) spanning 425,315 square meters (sq.m.).

RCR said it is the “most geographically diverse Philippine REIT,” with the properties in its portfolio located in central business districts of Metro Manila’s Makati, Bonifacio Global City and Ortigas, Quezon City, and Mandaluyong as well as in key cities of Naga, Tarlac, Cebu, and Davao.

“The office tenants of RCR properties are primarily engaged in essential services like information technology and business process management (IT-BPM),” the company said, adding that the business process outsourcing (BPO) forms core of its tenant base.

The company said it may add RLC’s Cyberscape Gamma in Ortigas and/or Robinsons Cybergate Center 1 in Mandaluyong, which are subject of the recent memorandum of understanding inked by RCR and RLC.

“Overall, RLC’s potential pipeline for infusions of RCR amounts to a total GLA of approximately 422,000 sq.m. over time,” RCR said.

On Wednesday, shares of Robinsons Land declined by 0.12% or two centavos at the stock market to close at P16 each. — Keren Concepcion G. Valmonte

TDF yields mixed on inflation, Q2 GDP reports

YIELDS ON THE central bank’s term deposit facility were mixed on Wednesday following the release of data showing slower inflation and the economy’s exit from recession and as concerns remain due to the Metro Manila lockdown.

Demand for the term deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) reached P673.551 billion on Wednesday, surpassing the P550-billion offer as well as the P643.58 billion in bids at last week’s auction.

Broken down, bids for the seven-day papers amounted to P200.545 billion, higher than the P150 billion auctioned off by the BSP as well as the P185.592 billion in tenders logged in the previous auction.

Banks asked for yields ranging from 1.675% to 1.85%, a narrower band compared with the 1.675% to 2.02% seen a week ago. The average rate of the one-week term deposits inched sideways to 1.7376% from 1.7375% previously.

Meanwhile, the 14-day term deposits attracted tenders amounting to P473.006 billion, higher than the P400-billion offer and the P457.988 billion in tenders seen at the Aug. 4 offering.

Accepted rates for the tenor ranged from 1.71% to 1.7495%, a slimmer margin versus the 1.719% to 1.759% seen last week. This caused the average rate of the two-week papers to inch down by 0.59 basis point to 1.7389% from 1.7448% in the prior auction.

The BSP did not offer 28-day term deposits for the 42nd consecutive auction to give way to its weekly offerings of bills with the same tenor.

The TDF and the 28-day bills are used by the BSP to gather excess liquidity in the financial system and to better guide market rates.

Yields on the term deposits were mixed after the release of the July inflation and the second- quarter gross domestic product data (GDP), Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“The lockdown could slow down the economy and inflation but also increased the need for liquidity buffers,” Mr. Ricafort said in a text message.

The economy grew by 11.8% year on year in the second quarter, marking the end of a 15-month recession caused by the pandemic, based on data released by the Philippine Statistics Authority (PSA) on Tuesday. It beat the 10.6% median GDP growth estimate of 20 analysts in a BusinessWorld poll last week.

The double-digit GDP growth was mainly due to base effects from the record 17% contraction in the April to June period last year when the country was under its strictest and longest lockdown.

However, the economy shrank by a seasonally adjusted 1.3% from the first quarter, reflecting the impact of the reimposed lockdown in March to April when cases surged. The economy expanded by 3.7% in the first half of the year, still below the government’s 6-7% target for 2021.

Metro Manila is under a two-week lockdown until Aug. 20 meant to curb a fresh surge in infections. Analysts have warned that recovery remains fragile due to the threat of the Delta variant and the renewed restriction measures.

Meanwhile, inflation stood at 4% in July, easing to a seven-month low and marking the first time the consumer price index fell within the BSP’s 2-4% target since the 3.5% print logged in December 2020. The slower July pace was mainly due to the slower increase in the transport index, the PSA reported last week. — L.W.T. Noble

So, what were we eating before Magellan came?

PHILIPPINE STAR/ MICHAEL VARCAS

SOME 500 years ago, explorer Ferdinand Magellan landed on the shores of an island in the Visayas. From there, he went to Cebu, converted its leader, Rajah Humabon, and then some 300 years’ worth of colonial history is recorded after that.

The discussion of food often takes a backseat in history, seeing it as marginal to the events and people that shape it. However, food in itself is a story: it points to a region’s ability to produce, move, trade, and share (among other things).

Cebu-based historian Louella Alix was the speaker at a talk by Gabii sa Kabilin, a heritage initiative by the Ramon Aboitiz Foundation, Inc. The July 30 talk, titled “From Sutukil to Kumbira: 300 Years of Culinary History during the Spanish Colonial Period,” discussed not just that, but also the precolonial civilization (and its way of eating) that the colonizers encountered.

Ms. Alix pointed out the origins of the word sutukil (the name of a popular restaurant). It is a portmanteau from three precolonial cooking methods: sugba (roasting over live coals), kilaw (eating meat raw with vinegar and spices), and tuwa or tinuwa (cooking with liquid). “Some wise guy in the ’80s or ’90s started opening his restaurants and called it ‘Sutukil’ (a pun on the grisly phrase ‘shoot-to-kill’),” she said. “Which [of the dishes] was the first?” Though the abbreviation places “sugba” as first, Ms. Alix believes that precolonial Filipinos served their earliest meals as kilaw. “Everybody ate raw or semi-raw food, not knowing what to do better,” she said. Sugba may have come later, but she’s firm that at least in those times, tuwa (or soup) pointed to the most advanced cooking method. “To cook with liquid is something that requires technology,” she said. That meant that those early people had to make vessels to cook in, with Filipinos using clay pots. “To knead and to mold clay means that people had time, means, and brains to think of producing the item.”

She pointed to an archaeological dig in Northern Cebu by the University of San Carlos and the National Museum which found jars and clay pots. The bigger jars were used for secondary burials, while the clay pots performed more prosaic tasks for the home, like cooking and storage. These were sent to the US for dating; and they were dated to have been made around the Iron Age (approximately 12,000 to 600 BC). “That means that there was already a civilization in Cebu during the Iron Age,” she said. “At that time, the Chinese had not even been to our shores. Europeans were still huddled in caves.”

On that note, she also pointed to a linguistic difference in “sugba” and “asal (as in inasal).” Sugba is roasting just pieces of meat, while asal meant roasting the whole animal. Cebu lechon (a whole roasted pig), a famous delicacy, began to be called so only after Hispanicized Tagalogs settled in Cebu, lending them the word.

She noted that Filipinos had mostly failed to adopt the spicier cuisines of our Southeast Asian neighbors, though we do have a similar preference for coconut milk.

In any case, she thanked Antonio Pigafetta, Ferdinand Magellan’s chronicler, for writing everything down. “Most of our knowledge of precolonial life in Cebu, we owe to [him],” she said.

According to her, the natives back then served the Spanish explorers tinuwa (pork with soup), grilled pork and fish, and Pigafetta recorded that fish was also eaten raw (kinilaw). She also mentioned a version of adobo, which made the Spaniards marvel that it was similar to something they also made at home (that is, stewed in lard and vinegar; which was how we got to give it a Spanish name). She also listed down the meats used for feasts and meals, as recorded by Pigafetta: deer, pigs, shrimp, crab, wild boar, chicken, carabao, and fish.

Because Magellan perished in the Battle of Mactan, the Spanish influence on our cuisine would not be seen until some 40 years later, after the landing of Miguel Lopez de Legazpi, who eventually came to sit as the first Spanish Governor of the Philippines and established Manila as the island groups’ capital.

Ms. Alix listed down vegetables and fruits which we have since taken for granted, but were actually transplants from the Galleon Trade: these included tomatoes, sayote, chico, pineapple, camote, and jicama. The Galleon Trade also brought cacao here, known and enjoyed by Cebuanos as sikwate (which itself comes from the Nahuatl word xocolatl, the root for “chocolate”).

A non-cooking aspect of Spanish colonization led directly to some of the sweetest of Pinoy dishes. Construction of Spanish churches, which used coral stones from the sea, were strengthened by a binder called agramasa, using tree sap from the law-an, lime, and egg whites. “Can you imagine how many egg yolks were collected?” said Ms. Alix. “Surely the housewives then would not have thought of wasting all these egg yolks.” This construction method led to the creation of leche flan, tortas, tocino del cielo, and yema.

The Spaniard taught us stewing techniques, with ingredients brought over from Spain and its colonies: tomatoes, olive oil, chickpeas, and peppers. Nuns, and friars’ cooks meanwhile, taught the cooking methods to local assistants or students, which was how stews and baked goods (broas, still popular in Cebu, being one of them) spread around the islands.

Ms. Alix did point out that Pigafetta noticed cakes made of cooked millet —  one still present on Cebuano tables as budbud kabug. Luckily for us, a lot of the precolonial meals were preserved, mostly due to a practical reason: “The Spanish dishes… are not served for daily fare. We have relegated it to fiestas and celebrations, as it is expensive to cook them.” — Joseph L.Garcia

LT Group profit declines by 63% to P4B

LUCIO C. Tan’s LT Group, Inc.’s (LTG) net income attributable in the first six months went down by 63% to P3.73 billion from last year’s P10.03 billion.

“This is mainly due to the higher provisioning for credit losses booked by its banking subsidiary and the elimination of the gain from the transfer of real estate assets at the consolidated level,” the company said in a statement on Wednesday.

The company said its net expenses and other income at the parent level stood at P185 million.

During the period, it said Philippine National Bank (PNB) had a negative net contribution of P6.46 billion after eliminating the gain of P33.6 billion at the consolidated LTG level.

Listed PNB’s net income for the period amounted to P22.2 billion under the pooling method, which already includes a P33.6-billion gain from the transfer of properties into PNB Holdings Corp. The bank’s net interest income declined by three percent to P16.85 billion.

The company’s tobacco business is said to have contributed P8.97 billion of total attributable income. It generated a P9.01-billion net income in the first semester, a 10% increase from P8.21 billion in the same period last year.

The tobacco industry’s volume estimate for the period stood at 26.8 billion, nine percent less than last year’s 29.5 billion sticks.

“This is due to the October to November 2020 price increases to pass on the additional excise taxes,” LTG explained.

The company said it is not against tax increases, however, it maintains that these increases should be “moderate” as this might lead to further volume declines.

Meanwhile, Tanduay Distillers, Inc. (TDI) added P602 million to LTG’s total attributable income. The unit saw an 11% growth in net income for the six-month period to P605 million from last year’s P543 million due to a 13% increase in liquor sales volume and 55% growth in bioethanol sales.

TDI’s nationwide market share inched up to 26.9% as of end-June this year from 24.1% year on year. Its market shares in the Visayas and Mindanao region also grew, with its market share in Visayas rising to 68.2% from 62.4% and in Mindanao growing to 79.5% from 72%.

Some P343 million were contributed by Asia Brewery, Inc. (ABI) to LTG’s total attributable income. Its net income for the first half amounted to P343 million, surging by nearly eight times from P40 million.

“The higher income is largely due to the absence of any losses from the AB Heineken joint venture as the partnership transitions starting 2021 to the engagement of ABI to brew and distribute Heineken® and Tiger® beers in the Philippines,” LTG explained.

ABI revenues for the period “were relatively flat” as the higher volume from Cobra Energy Drink, which now has 65% market share, offset the lower volume of bottled water and soymilk.

Property arm Eton Properties Philippines, Inc. made up for P287 million of LTG’s total attributable income. The unit’s income for the six-month period amounted to P288 million, declining by 29% from last year’s P404 million as both residential unit sales and leasing income went down.

Eton Properties has a leasing portfolio of around 181,000 square meters (sq.m.) of office space and over 45,000 sq.m. of retail space.

It has several projects in the pipeline, which include the 36-storey office and residential development Blakes Tower in Makati City, with 11,400 sq.m. of office space and 14,000 sq.m. of residential space. It is also working on retail and commercial center Eton City Square 1 in Laguna, which will add 7,200 sq.m. of gross leasable area to its commercial leasing portfolio in phase 1.

LTG’s 30.9% stake in Victorias Milling Co., Inc. added P169 million to the company’s total attributable income.

Shares of LTG at the stock exchange declined by 1.61% or 16 centavos on Wednesday, closing at P9.80 apiece. — Keren Concepcion G. Valmonte

Right technology key to ensuring safety while promoting innovation in insurance industry

INNOVATION in the insurance industry will continue to flourish without sacrificing the need to prevent money laundering and risks in financing, an industry expert said.

“I believe technologies can help companies mitigate (such problems),” Etiqa Philippines President and Chief Executive Officer Rico T. Bautista said at the Risky Business Luncheon Series Media Briefing on Tuesday.

“Certain technology solutions can be put in place to be able to detect anomalous transactions. Also, I believe that compliance and innovation are not two opposing ideas,” he added.

Mr. Bautista also noted that the Insurance Commission has already set guidelines on how companies can engage in innovation projects and come up with sandbox approaches to certain initiatives.

“It’s a matter of knowing the opportunities at hand and what technology approaches to be used to seize such opportunities,” he said.

UNOBank Chief Executive Officer and Co-Founder Manish Bhai said regulators and the government should make sure there are continuous efforts to address risks.

He lauded the government’s implementation of the national ID system, which is seen to improve access to financial services.

The Philippine Statistics Authority has said it is on track to meet its national ID registration target of 50–70 million this year.

As of July, the government has finished collecting demographic data from 37.2 million Filipinos for the national ID.

Bharath Vellore, managing director for Asia-Pacific at LexisNexis Risk Solutions, said: “At the pace of innovation that’s happening, it’s never going to be black and white. There will be a lot of areas that will need further understanding.”

“There will be a lot of areas where a context needs to be developed, and that can only happen when continuous engagement and feedback loops are put in place as new policies (come in),” he added. — Arjay L. Balinbin

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