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Exports slip back into contraction in January

THE COUNTRY’S merchandise exports slipped back into negative territory in January after showing growth in the previous two months, while merchandise imports continued their streak of decline for the 21st month, the Philippine Statistics Authority (PSA) reported this morning.

Merchandise exports shrank by 5.2% to $5.490 billion in January after a revised 1.7% yearly growth in December 2020 and 9.4% in January 2020, preliminary trade data from the PSA showed.

Likewise, merchandise imports fell 14.9% to $7.911 billion in January, faster than the declines of 8.2% and 2.8% in December and January 2020, respectively.

These figures were way below the Development Budget Coordination Committee’s growth targets of 5% and 8% for goods exports and goods imports for this year, respectively.

The January export fall marked its first fall following two straight months of year-on-year expansion. For merchandise imports, the decline is on its 21st straight month.

The latest trade figures brought trade balance to a $2.421-billion deficit in January, wider than the $2.149-billion gap in December 2020, but narrower than the $3.504-billion shortfall in January 2020.  – Jobo E. Hernandez

JCI Philippines x StartUp Village MoA signing and Forty Under 40: Startup Academy program launch

JCI (Junior Chamber International) Philippines, headed by its 2021 National President Jude Avorque Acidre, and StartUp Village (SUV), headed by its Founder/Chairman, Jay Bernardo, and Founder/President, Carlo Calimon, enter into a partnership by signing a Memorandum of Agreement (MoA) to help enable entrepreneurs and startups, particularly those who are part of the JCI network through the Startup Academy. This program is just one of the many programs planned by JCI under its newest national program, Forty Under 40 — a series of master classes on different disciplines to be offered to JCI members.

JCI Philippines, formerly Philippine Jaycees, Inc., is a nonprofit organization with local chapters all over the country composed of young active citizens aged 18 to 40 years old who take the initiative to solve local challenges focused on sustainable impact locally and globally. On the other hand, SUV is a one-stop startup enabler that focuses on bringing entrepreneurial ventures into the mainstream for incubation and acceleration.

Memorandum of Agreement signing between JCI Philippines and Startup Village for Forty Under 40 Startup Academy

Through this partnership, Forty Under 40’s Startup Academy will be the first among JCI’s entrepreneurial skills development initiatives open to all JCI members. This is an entrepreneurship development program of JCI Philippines that trains and helps young JCI member-entrepreneurs to become full-fledged and socially responsible entrepreneurs. “Following the thrust of JCI globally, we hope to provide engaging opportunities for young, business-minded JCI leaders for a changing world,” according to Tertiana Alexie Tupas, an Asian Institute of Management alumna and JCI Philippines’ 2021 national program director for Forty under 40.

The program will adopt SUV’s existing incubation program, further customized to address the emerging needs of entrepreneurs while still following its core framework that follows the three masteries: Mastery of the Self, Mastery of the Environment, and Mastery of the Enterprise. The program will be delivered through a combination of virtual classes and group/individual mentoring by industry experts and resource persons from the academe. As a culminating activity, the participants are expected to do a pitch before a group of potential funders and angel investors during the Philippine Startup Week in November for a chance to turn their dream startup into a reality.

“The crisis brought about by the COVID-19 pandemic has become a providential period of catharsis, of transformation, as we prepare ourselves for the greater challenges ahead. Now more than ever, young leaders need to better ourselves and improve our capacity to create and sustain innovative solutions to everyday community problems,” said JCI Philippines 2021 National President Jude Avorque Acidre.

This 40-online session program will begin on April 10, 2021 following the MoA signing scheduled on March 10, 2021.

DITO Telecommunity launches commercially in Visayas and Mindanao

Kickstarts CSR program of providing free DITO service to 3,000 VisMin frontliners in cooperation with LGUs

In an unprecedented move, DITO Telecommunity Corporation, the country’s third major player in the telecommunications industry, heralded its entry into the market by announcing that it will be providing free call and text as well as broadband services to 3,000 frontliners in ten areas in Visayas and Mindanao with the help of the local government units (LGUs) as a way of strengthening its commitment of nation-building and partnership with the Filipino people.

This announcement, capped by a ceremonial turnover to Davao City Mayor Sarah Duterte Carpio and Davao City Vice-Mayor Sebastian Duterte as 300 frontliners of the City were named as the first beneficiaries out of the 3,000 targeted frontliners, became the highlight of the commercial launch virtual press conference held last March 8, 2021.

The momentous yet simple ceremony was participated in by key DITO executives Dennis A. Uy, Chairman and CEO; Retired Major General Rodolfo Santiago, Chief Technology Officer (CTO); and Atty. Adel Tamano, Chief Administrative Officer; with special messages from Secretary Gregorio Honasan II of the Department of Information and Communications Technology (DICT), and Commissioner Gamaliel Cordoba of the National Telecommunications Commission (NTC).

An insurmountable task

In his opening statement DITO Chief Technology Officer, Retired Major General Rodolfo Santiago recounted how at the beginning critics of the initiative said that building a network in more than a year was a fool’s errand, that it was bound to fail, that it simply could not be done, especially as the global pandemic hit at a crucial juncture in the network rollout.

However just a few weeks before the commercial launch, DITO’s services far exceeded the required benchmarks of the first government-mandated audit. The audit findings showed that DITO demonstrated an average speed of 85.9 Mbps for 4G and 507.5 Mbps for 5G with a population coverage of more than 37%, important indicators that point to the brand’s readiness to fulfill its mandate of bringing world-class connectivity to every Filipino.

Not resting on this achievement, the DITO CTO stressed, “As we begin our commercial launch, all I can say is that there is more work to be done and together, we will succeed and make a difference in transforming the landscape of Philippine telecommunications.”

Public and private cooperation: a triumph of the Filipino people

Messages from the two main regulating bodies recognized the spirit of partnership that DITO has demonstrated to become a true partner in nation-building and in bringing better access to communications technology to the Filipino people.

DICT Secretary Gregorio Honasan II reiterated the importance of having the telecommunications industry to be at parity with the rest of the world, in terms of technology, and how the entry of DITO through a transparent and fair bidding has spurred an increase in investments and infrastructure spending in the telecom sector that in the long term will benefit the entire nation.

NTC Commissioner Gamaliel Cordoba, further stressed that the successful launch of DITO is an example of how cooperation, and active collaboration of government and private corporations, will be key to bring about true recovery headed by advancements in the realm of communications and connectivity, and that for him is a triumph of the Filipino people.

Nation-building as the true motivation of the country’s third major player

In his statement, Atty. Adel Tamano, DITO Chief Administrative Officer, one of the pioneers of DITO recalled how it all began. 

“DITO was born out of a spirit of nation-building.”

Atty. Tamano said that the rationale for a third telco was to serve the underserved and to provide Filipinos with a better option, a wiser choice. He further recalled that our national leaders believed that without the right ICT infrastructure, without real competition, the Philippines will never reach its full potential.

“This is the genesis of this project, the origins of why DITO was born. This our why and DITO’s DNA.”

He ended by saying, “We are here to serve our consumers, to provide world-class telecommunications services to Filipinos, in short, to do whatever it takes, whatever “diskarte” that we need to do, to deliver our promise of weaving Filipino communities together with stronger and better connectivity.

And the chief administrative officer tied it all in as to the primary reason why instead of a big launch, DITO’s first commercial act is one that demonstrates the commitment of DITO to build the nation — a provision of free service to 3,000 Filipino frontliners.

 

DITO na tayo

“In the following weeks you will see us rise in various areas of the country. But today, March 8, we first give back to where it all began.”

In this sentimental yet powerful statement, Dennis A. Uy, the chairman and CEO of DITO was able to answer the questions in the minds of people as to why VisMin, and when DITO services will reach Luzon and the National Capital Region in spite of the telco’s national network rollout.

To close the event, the chairman and CEO had this to say referring to this unparalleled launch of paying it forward, “With this gesture, as a partner in nation-building, we send the message to the people of the Philippines wherever they may be that DITO is more than just a telco. We are here to serve, and, in this manner, we want the entire country to know na “DITO NA KAMI, DITO NA TAYO and magkita-kita tayo diyan very soon.”

For more information on the points of sale, the attractive welcome plan and other details, please visit the official Facebook page of DITO at www.facebook.com/DITOphofficial or the website at www.dito.ph.

Dollar reserves pick up anew in Feb.

By Luz Wendy T. Noble, Reporter

THE COUNTRY’S dollar reserves rose in February following a slight decline in January, boosted by gains from the central bank’s investments abroad and its foreign exchange operations.

Gross international reserves (GIR) — which shield the country from liquidity shocks — stood at $109.082 billion as of end-February, data from the Bangko Sentral ng Pilipinas (BSP) showed on Thursday.

The end-February level inched up 0.38% from the $108.673-billion level in January, and rose 23.7% from $88.187 billion logged a year earlier.

The BSP expects to end the year with $102 billion in dollar reserves.

“The month-on-month increase in the GIR level reflected inflows mainly from the BSP’s foreign exchange operations and income from its investments abroad,” the central bank said in a statement.

However, this was offset by the lower revaluation adjustments of the BSP’s gold holdings amid the decline in international gold prices as well as foreign currency withdrawals meant to service debt obligations.

Ample foreign exchange buffers protect the country from market volatility and ensure that it is capable of paying its debts in the event of an economic downturn.

At its end-February level, the GIR is enough to cover 11.7 months’ worth of imports of goods and payments of services, and primary income.

It is also equivalent to 9.5 times the country’s short-term external debt based on original maturity, and 5.4 times based on residual maturity.

In February, gains from foreign investments abroad rose 2.4% to $94.613 billion from $92.379 billion as of end-January and by 24.7% from the $75.861 billion seen a year earlier.

These gains, which fueled the GIR’s pickup in February, reflect the improvement in the global and US stock markets in the past weeks, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Meanwhile, foreign currency deposits slipped 8.5% to $3.251 billion from $3.554 billion in the prior month, but increased 28% from the $2.548 billion as of end-February 2020.

The BSP’s gold holdings were valued at $9.17 billion as of end-February, dropping 14.2% from the $10.692 billion in January but rising 14.4% from the $8.015 billion a year ago.

Reserves with the International Monetary Fund (IMF) also dipped 0.11% to $812.5 million from $813.4 million a month ago but still increased 38.58% from the $586.3 million in February last year.

On the other hand, special drawing rights, or the amount the country can tap from the IMF stood at $1.233 billion for the second consecutive month, higher by 5% than the $1.174 billion a year ago.

The country’s GIR reached record level $110.117 billion as of end-December 2020.

“For the coming months, the GIR could still post new record highs, thereby fundamentally providing some support for the peso exchange rate especially versus any speculative attacks,” Mr. Ricafort said.

Car sales in Philippines continue to slump

CAR SALES remained sluggish in February. — PHILIPPINE STAR/ MICHAEL VARCAS

CAR SALES in February declined by 12% compared with the same month last year, the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) said in a report on Thursday.

The joint report said that the industry sold 26,230 vehicles in February, lower than the 29,790 units in the same month last year.

To recall, automotive sales in February 2020 showed a slight recovery from the disruptions to dealership operations caused by the Taal Volcano eruption earlier that year.

February and year-to-date 2021 car sales

Month on month, February sales grew by 12.2% from January levels.

CAMPI President Rommel R. Gutierrez said in a statement that the industry welcomed the monthly growth, noting improvements in sales of Asian utility vehicles (AUV) and light trucks.

However, he said CAMPI remains concerned the provisional safeguard duties slapped on car imports will hurt the industry’s recovery.

“While the industry sees early signs of recovery, the provisional import duties, more so if it becomes definitive, will derail any recovery efforts of the automotive industry,” Mr. Gutierrez said.

“Rather than restricting imports, a better incentive scheme must be crafted to attract investments for local production of motor vehicles.”

The Department of Trade and Industry (DTI) imposed provisional safeguard duties on imported cars after it found a link between a decline in local industry employment and an import surge, based on a petition from an auto parts labor group.

The Safeguard Measures Act or Republic Act No. 8800 allows domestic producers to ask the government to conduct an investigation into their import competitors if they claim to have been injured by excessive imports.

Car manufacturers have started raising prices as they collect deposits for cars affected by the provisional duties while the Tariff Commission conducts its own investigation.

In February, commercial vehicle sales, which account for almost 70% of the market, declined 15.5% to 18,331 units.

Broken down, sales of light commercial vehicles dropped 15.7% to 13,483 units, while light truck sales fell 25.9% to 411 units. AUV sales slid 14.5% to 4,045 units.

On the other hand, passenger vehicle sales dipped 2.4% to 7,899 cars in February.

Year-to-date automotive sales fell 7.3% to 49,610 units from 53,513 vehicles in the same two months last year.

Commercial vehicle sales declined 11.5% to 34,416 units in the first two months of the year, while passenger car sales went up 3.8% to 15,194 units.

Toyota Motors Philippines Corp. (TMP) continued to have the largest market share at 49.84% after selling 13,074 units. Mitsubishi Motors Corp. had a 19.34% market share with 5,072 units sold, while Suzuki Philippines, Inc. sold 1,513 units at 5.77% market share.

In 2020, industry car sales plunged 39.5% to 223,793 units amid the pandemic.  — Jenina P. Ibañez

Duterte liberalizes satellite access

PRESIDENT Rodrigo R. Duterte on Thursday signed an executive order (EO) liberalizing access to satellite technology after accusing telecommunication companies of failing to improve their service.

EO 127 expands internet services through inclusive access to satellite services. It amends EO 467, which required telecommunication companies to get a congressional franchise before using  satellite facilities.

The order allows telecommunication entities, value-added service providers  and internet service providers authorized by the National Telecommunications Commission (NTC) to have direct access to all satellite systems, whether fixed or mobile, international or domestic.

“Broadcast service providers may also be allowed to directly access satellite systems subject to NTC rules, regulations and authorizations,” according to the order.

The regulator must update its rules  and fast-track the process to allow value-added service providers and internet companies to “directly access, utilize, own and operate facilities for internet access service using satellite technologies such as, but not limited to, very small aperture terminals, broadband global area network and other similar technologies, for all segments of the broadband network.”

Mr. Duterte also ordered the Department of Information and Communications Technology to pursue policies to get orbital slots for Philippine satellites.

Mr. Duterte in July last year told telecommunication companies to improve their service by December or risk being shut down. — Kyle Aristophere T. Atienza

Israeli-Filipino firm plans to make COVID vaccines in Philippines

By Jenina P. Ibañez, Reporter

AN ISRAELI-FILIPINO firm plans to manufacture coronavirus disease 2019 (COVID-19) oral vaccines in the Philippines, the Philippine Economic Zone Authority (PEZA) said.

The PEZA board is set to approve the pharmaceutical firm’s application to manufacture the vaccines in one of its economic zones, PEZA Director-General Charito B. Plaza told ABS-CBN on Wednesday.

“It’s really a big investment because they are considering to make the Philippines the manufacturing hub of these oral COVID(-19) vaccines and other related medicines. They will make this the hub of the Asia and Pacific region, and even the whole world,” she said.

Ms. Plaza in a mobile message on Thursday said that she will share details about the firm, the size of the investment, and the production timeline after the PEZA board’s March 12 meeting.

The firm is 50% Israeli and 50% Filipino owned, she said.

“They ask(ed) to give the details once PEZA board approves their application,” Ms. Plaza said.

“Next week we are expecting the scientists, the very inventors, who will come to the Philippines,” she added.

PEZA said that it aims to reach over P100 billion in investment pledges this year, higher than last year’s P95 billion. Last year’s investments fell almost 20% from the P117.54 billion recorded in 2019.

PEZA approved P11.308 billion in investment pledges in January 2021, or 139% higher than the P4.726 billion in the same month last year.

Amid the alert over the Taal Volcano in Batangas, Ms. Plaza said that PEZA is considering new locations for economic zones. Lima Technology Center and the First Philippine Industrial Park are both in Batangas, but are farther than a 20-kilometer radius from the volcano.

“We are now identifying potential economic zones which will be farther away from danger zones. We’re ready for that,” she said. “For new applications for ecozone development we really require them to get a certification from… disaster agencies so that we will be assured that they will be located far away from the danger zones.”

Operators of existing economic zones, she added, are being asked to prepare for potential transfer later on, noting that the agency is considering Quezon Province, Laguna, and Cavite.

State seismologists on Tuesday raised the alert status of Taal Volcano to level 2 due to “increasing unrest.”

Short-term cash handouts failed to make impact — WB

FAMILIES ENROLLED in the government’s conditional cash transfer (CCT) program may have to receive handouts for more than a year and a half in order to see a significant impact on education and jobs, the World Bank  (WB) said.

In a study titled “Long-term impacts of a short exposure to CCTs in adolescence: evidence from the Philippines,” the World Bank found the Pantawid Pamilyang Pilipino Program (4Ps) fell short of its objective to break the “cycle of intergenerational transmission of poverty.”

The study focused on beneficiaries aged 12.5-14 years old who joined the program in 2008. The World Bank said the study showed that these beneficiaries did not see any significant improvement in their education and labor market outcomes after receiving cash handouts for one and a half years.

One of the 4Ps’ objectives was to ensure the young beneficiaries would enjoy better socioeconomic outcomes as adults.

“We demonstrate that just 1.5 years of exposure is not sufficient to move the needle on the core objectives of most CCT programs: education, translated into superior labor market outcomes and poverty reduction,” the World Bank said in a report published Thursday.

“At the same time, our results suggest that just 1.5 years of cash transfer support during critical transition from adolescent to adulthood may trigger delays in marriage and fertility for girls: we find evidence of delay in marriage by one year, and delay in the first birth by approximately half a year. We do not find impacts on any other indicator of women’s empowerment, though,” it added.

The flagship CCT program of the Philippine government, 4Ps provides poor Filipino families with cash on the condition that they keep their children in school and subject themselves to health examinations.

The program saw 300,000 beneficiaries during the first year of implementation in 2008, and now currently has four million family beneficiaries. The budget for the 4Ps also surged to P78 billion in 2017 from P50 million in 2008.

Beneficiaries can receive cash transfers for up to five years if they meet the specific conditions under the program.

The World Bank cited previous studies that an additional 1.5-2 years of exposure to the CCT program could generate a more lasting impact, compared with short-time exposure.

“We interpret our results as sobering and cautiously optimistic at the same time,” it said.

Among beneficiaries, the World Bank noted there is an increased likelihood of violence by spouses who do not want their female partners to work professionally.

“This effect is compatible with an increase in women’s willingness to work, without any change in their partner’s attitude to women working,” it noted.

The 4Ps secured various credit financing from multilateral lenders last year to supplement its budget.

In September 2020, the World Bank approved a $600-million loan for the program. The Asian Development Bank also granted loans worth $500 million for the program. —  Beatrice M. Laforga

MWSS adjusts water rates for 2nd quarter

METRO MANILA’s water concessionaires are adjusting rates starting April 1, 2021. — PHILIPPINE STAR/MICHAEL VARCAS

THE METROPOLITAN Waterworks and Sewerage System Regulatory Office (MWSS) has given the go signal for two Metro Manila water concessionaires to adjust rates in the second quarter.

MWSS Chief Regulator Patrick Lester N. Ty said in a briefing the board of trustees approved the implementation of a foreign currency differential adjustment (FCDA) for the April to June period, after reviewing the proposals of Manila Water Co., Inc. and Maynilad Water Services, Inc.

Manila Water, concessionaire for the east zone, will apply an FCDA of 0.84% of its average basic charge of P28.52 per cubic meter (cu.m.) or P0.24 per cu.m. This translates to an increase of P0.05 per cu.m. from P0.19 per cu.m. FCDA in the first quarter.

Residential customers of Manila Water who consume 10 cubic meters or less will see a P0.27 rise in their monthly bills during the quarter. Those who consume 20 cu.m. and 30 cu.m. will see their bills go up P0.60 and P1.22, respectively.

“The reason why there is an increase in the rates of Manila Water is because there are significant portions of its loans payable in this quarter that are in Japanese yen and euros. Since these two currencies appreciated against the Philippine peso, this caused an increase in their FCDA,” Mr. Ty said.

Meanwhile, west zone water concessionaire Maynilad will implement an FCDA of -0.41% or –P0.15 per cu.m. of its average basic charge of P 36.24 per cu.m. This adjustment is P0.01 per cu.m. lower than the previous FCDA of -P0.14 per cu.m.

Jennifer C. Rufo, Maynilad head of corporate communications, said in a mobile phone message that monthly bills of residential customers who use 10 cu.m. or less will decline by P0.03 in the second quarter.

Customers of Maynilad who consume an average of 20 cu.m. and 30 cu.m. will see a P0.10 and P0.20 reduction in their bills, respectively.

“The majority of the loans of Maynilad that are payable for this quarter are in United States dollars. The peso appreciated against the dollar which caused the rollback,” MWSS’ Mr. Ty said.

The FCDA is a tariff mechanism which allows water concessionaires to regain losses or return gains caused by the movement of peso against other foreign currencies. The water providers pay foreign currency-denominated concession fees to MWSS, as well as loans that are used to fund projects to expand and improve water and sewerage services.

RATE REBASING TALKS
Meanwhile, Mr. Ty said the MWSS regulatory office can now start preliminary discussions on the next rate rebasing period. He said they will try to wait for the revised concession agreement before making any moves.

To recall, President Rodrigo R. Duterte ordered the revision of the water concession agreements with Manila Water and Maynilad after the water crisis that affected Metro Manila in 2019.

Under the current five-year rate rebasing period, Manila Water is eligible to hike rates by P6.22 to P6.50 per cu.m., while Maynilad is allowed to increase rates by P5.73 per cu.m. The rate hikes will be implemented in tranches and is set to end in 2022.

“We will try to wait for the revised concession agreement before we start. But if we are forced to start the preliminary discussions for the rate rebasing for next year, we will factor that in. But there might be new terms and conditions and adjust it accordingly,” Mr. Ty said.

“We are going to be looking for a consultant, via a public bidding, that will be doing the rate rebasing with us probably by the end of the year,” he added.

Further, Mr. Ty assured that there would be no spike in water rates even after both water companies deferred adjustments in rates for 2021.

“In effect, any upward pressure for the deferral will be felt in the fifth rate rebasing or that’s going to be in 2023. For next year, there will be no pressure to make that adjustment,” he said.

Metro Pacific Investments Corp., which has a majority stake in Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Revin Mikhael D. Ochave

Ayala Corp. reports 2020 profit fall, Q4 recovery

AYALA CORP. on Thursday reported a net income of P5.8 billion in the fourth quarter of last year, which it said included the impact of the partial reversal of some losses incurred by Manila Water Co., Inc. and other provisions.

The listed conglomerate also said its core income in the fourth quarter hit P6.8 billion, which excluded the provisions recognized by various business units and a partial reversal of Manila Water’s “remeasurement loss.”

It did not disclose the income figures for the fourth quarter of 2019, but said its quarter-on-quarter reported income grew by 69% and core income by 46% for the October-December 2020 period.

“Our sequential growth in the fourth quarter reflects a recovery in consumer confidence that has started to show in the latter part of 2020,” Ayala President and Chief Operating Officer Fernando Zobel de Ayala said in a statement.

“We expect this trajectory to continue and lead to a full economic revival by 2022 as mobility further improves and as the country executes on the vaccination rollout as planned,” Mr. Zobel added.

Ayala said it recognized a remeasurement loss in December 2019 when it reclassified its investment in Manila Water to follow the accounting standard for assets held for sale. In 2020, it had a partial reversal of the loss provision.

For 2020, Ayala said its reported net income fell by 51% to P17.1 billion, while its core income fell by 16% to P26 billion “as the impact of mobility restrictions weighed down on its various business units.”

Core profit excluded the divestment gains from its education and power businesses booked in 2019, Manila Water’s asset reclassification, and “significant” loan loss provisions for banking unit Bank of the Philippine Islands (BPI).

All of Ayala’s subsidiaries posted lower income last year because of the pandemic’s effects on business operations.

Real estate arm Ayala Land, Inc. recorded a 74% fall in net income to P8.7 billion from P33.2 billion. Revenues declined by 43% to P96.3 billion from P168.79 billion, as limited construction activities led to lower bookings.

BPI saw a 26% decrease in net income to P21.4 billion from P28.8 billion. Some P28 billion was set aside for loan loss provisions, five times larger than usual as the bank anticipated nonperforming loans.

Telecommunications subsidiary Globe Telecom, Inc. reported a 16% profit decline to P18.6 billion from P22.3 billion because of lower EBITDA (earnings before income, tax, depreciation, and amortization), higher depreciation charges, and non-operating expenses.

Excluding non-recurring charges, and foreign exchange and mark-to-market changes, core net income for Globe also went down by 13% to 19.5 billion.

Ayala’s AC Energy group, meanwhile, posted P6.2 billion in 2020, down by 75% from the P24.6 billion it posted in the previous year. The group operates in five markets, with its first project in Australia under construction. Listed subsidiary AC Energy Corp. accounted for half of the group’s net income.

Manila Water’s net income slumped by 18% to P4.5 billion after it recognized additional estimates for probable losses and lower contributions from domestic subsidiaries because of the pandemic’s impact.

Meanwhile, AC Industrial Technology Holdings, Inc. managed to shrink its net loss to P1.8 billion from P2.4 billion income in 2019, as its subsidiaries Integrated Micro-Electronics, Inc. (IMI) and MT Group performed better in 2020.

IMI incurred a net loss of $3.5 million, down from the $7.80-million net loss in 2019.

Ayala’s consolidated capital expenditure last year fell by 29% to P152 billion compared with the previous year’s P215 billion. Some P12.1 billion of last year’s spending went to the parent company to support its emerging businesses.

“This year, the Ayala group will continue to execute on its growth strategy and has allocated P196 billion in capital spending. A continued push for private sector investments would help revitalize the economy,” Mr. Zobel said.

Of the P196 billion, P11.5 billion will be allocated to support new businesses.

On Thursday, Ayala shares at the stock exchange went down by 0.77% to P773 from P779 on Wednesday. — K.C.G. Valmonte

Converge ICT increases capex by 25% to P20B

By Arjay L. Balinbin, Senior Reporter

LISTED fiber internet provider Converge ICT Solutions, Inc. expects to spend P20 billion on its expansion efforts this year, as it targets to cover approximately 35% of the country’s households by December, a company official said.

“We invested P16 billion in 2020, and we plan to invest P20 billion or more this year,” Converge Chief Financial Office Advisor Matthias Vukovich said at a virtual press briefing on Thursday, referring to the capital expenditure (capex) budget for the year.

He said the budget will be used for the expansion of Converge’s backbone and the deployment of additional fiber-to-the-home (FTTH) ports.

“The budget for the backbone is approximately 30% of the P20 billion, which are primarily for Mindanao and the Visayas,” Mr. Vukovich added, noting that 50% of the budget will be used for its network in Luzon.

The remaining 20% of the capex will go to digitization initiatives.

Converge saw its net income for 2020 surge 78% to P3.39 billion from P1.91 billion in 2019.

Total revenues increased 71% to P15.65 billion from P9.14 billion.

Broken down, the company’s residential business contributed P12.63 billion to the total revenues, or 99% higher than P6.35 billion earned in 2019, while the enterprise segment’s contribution grew 9% to P3.02 billion from P2.79 billion.

The company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) grew 76% to P8.22 billion from P4.67 billion, booking a margin of 52.5% from 51% in 2019.

Converge officials said the company is on track to achieve its target to cover about 55% of households in the country by 2025, noting that it deployed 1.5 million new FTTH ports last year, “more than 1.75 times the number of FTTH ports deployed in 2019.”

The company also reported that its residential subscriber base doubled last year, reaching about 1,038,000 subscribers by December from 530,000 by the end of 2019.

“As the home became both office and classroom amid the global pandemic, we further accelerated our fiber network rollout to deliver high-speed broadband connectivity to more Filipinos, reaching underserved and unserved areas in the country,” Converge Chief Executive Officer and Co-Founder Dennis Anthony H. Uy said.

The company expects sustained growth in its residential user base to 1.6-1.7 million by December this year, owing to high demand for broadband amid a pandemic crisis.

“Demand from enterprise customers is projected to accelerate in 2021, notably driven by an expected recovery of the SME (small and mid-size enterprise) segment, resulting in total expected consolidated year-on-year revenue growth of approximately 10% in 2021, subject to market recovery from COVID pandemic impact,” it added.

Converge ICT Solutions shares closed 1.83% lower at P17.18 apiece on Thursday.

SMC posts ‘sustained’ recovery in second half of 2020

SAN MIGUEL CORP. (SMC) posted a net income of P25.87 billion in the second half of 2020, a reversal of nearly P4 billion in net loss seen in the first semester.

In a press release on Thursday, the diversified conglomerate also said that its July-December profit was 15 times higher than what it recorded in the same period in 2019.

The company’s net sales for the period reached P373 billion, up by 6% from P352.8 billion in the first half.

“While it has not been a good year for all businesses and our economy overall, we’re encouraged by the sustained recoveries that our businesses showed in the second half,” SMC President and Chief Operating Officer Ramon S. Ang said in a statement.

“There are still so many challenges ahead and [there’s] a lot of uncertainty. But we believe our economic recovery is underway as the vaccine rollout gathers pace,” he added.

For 2020, SMC’s net income amounted to P21.88 billion, declining by 55% from P48.57 billion in 2019.

Net sales for the year dropped by 29%, amounting to P725.8 billion from P1.02 trillion in the previous year.

San Miguel Food and Beverage, Inc. (SMFB) recorded a net income for the year of P22.4 billion, 31% down from the P32.28 billion in 2019.

Net sales of SMFB saw a 10% decrease to P279.29 billion from P310.79 billion. SMC said the improvement posted by its beer business and the packaged foods segment in the second half of the year was offset by lower volumes in the protein and animal nutrition and health segments.

SMFB division San Miguel Brewery, Inc. saw its net income decline by 36% to P17.46 billion from P27.29 billion. Net sales for the brewery hit P107.93 billion, 24% lower than its 2019 sales worth P142.27 billion.

Meanwhile, the net income of SMFB’s Ginebra San Miguel, Inc. (GSMI) division in 2020 soared by 65% to P2.76 billion from P1.67 billion, while its revenues posted a 25% jump to P36.20 billion from P29.06 billion.

“GSMI benefited from continued strong consumption with volumes reaching 38.6 million cases. Marketing promotions, thematic campaigns, coupled with the continued expansion of its distribution reach, helped drive growth,” the company said.

San Miguel Foods saw its income for the year decline by 17% to P2.87 billion from P3.45 billion. Revenues for the SMFB division inched down by 3% to P135.17 billion from P139.46 billion.

The company said its prepared and packaged food segment posted a solid performance despite the pandemic, brought by food delivery services and higher dine-in activities in the second half of the year.

“Seasonal demand surge during the holidays, together with incremental sales from community resellers, an alternative channel we created at the height of quarantine restrictions that has since grown significantly, contributed to the food business’ improved performance,” the company said.

The conglomerate’s power unit SMC Global Power Holdings, Corp. saw its income grow by 31% to P18.87 billion from P14.36 billion in 2020. Full-year revenues amounted to P115.03 billion, 15% lower than 2019’s P135.06 billion.

“This was mainly due to the deferment of the mid-merit power supply agreement with Meralco (Manila Electric Co.), the extended contract with Masinloc (Masinloc Power Partners Co. Ltd.), and low average realization rate from new power contracts,” the company said.

SMC Global Power is also developing more infrastructure for its services.

“SMC Global Power completed its Masinloc Unit 3 with a capacity of 335 MW in September 2020, while the construction of its 1000-MW capacity BESS project is now in full swing,” the company said.

While it saw small improvements in the second half of the year, oil company Petron Corp. incurred a net loss of P11.41 billion, a reversal from its 2019 income of P2.30 billion. Revenues also saw a 44% decline to P286.03 billion from P514.36 billion in 2019.

“Consolidated sales volumes from both Philippine and Malaysian operations down 27% to 78.6 million barrels, from 107.0 million barrels a year ago,” the company reported.

SMC’s infrastructure unit recorded revenues of P14.56 billion in 2020, down by 38% from P23.41 billion in the previous year due to the travel restrictions implemented to curb the spread of the coronavirus disease 2019 (COVID-19).

Operating income meanwhile dropped to P2.57 billion from P11.44 billion.

SMC Infrastructure opened Skyway Stage 3 to the public, which links the South Luzon Expressway in Alabang to North Luzon Expressway in Balintawak, a project which cuts travel time from the southern tip of the metro to its northern area.

In December 2020, SMC issued and listed P13.8 billion Series 2-K preferred shares at the exchange with an annual interest rate of 4.5%.

Despite most of its units posting a decline in 2020, Mr. Ang said the company is committed to delivering its products and services this year.

“We will continue to stay focused on gaining performance improvements in this new normal while pursuing initiatives that generate jobs and deliver tangible assets to fuel our economy’s growth,” SMC’s Mr. Ang said.

SMC shares at the stock exchange closed at P121.00 apiece on Thursday, down by 2.42% from P123.50. — Keren Concepcion G. Valmonte

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