PARIS — Shoppers searching Google for cosmetics will be able to try them on virtually through a deal with L’Oreal, as the French group looks to make up for lost store sales caused by coronavirus lockdowns by expanding online.
Maybelline maker L’Oreal, which returned to comparable sales growth in the third quarter when coronavirus restrictions eased, has sped up some of its web initiatives as a result of the pandemic, its digital chief Lubomira Rochet said.
“There’s been an acceleration in all our partnerships due to COVID-19,” Ms. Rochet said in an online presentation on Thursday.
The Google partnership relies on technology designed by ModiFace, a Canadian augmented reality specialist acquired by L’Oreal in 2018, and will also extend to the US group’s YouTube video sharing platform, Ms. Rochet said.
People seeking lipsticks or eye shadows by L’Oreal brands, which include Lancome and Urban Decay, who come across their adverts on Google or YouTube can then try them online.
YouTube is one of the go-to sites for cosmetics users who often seek out make-up tutorials online, or want to learn from others how to curl their hair.
L’Oreal, which already had a ModiFace partnership with social media site Facebook, has seen usage of virtual make-up tools rise fivefold during COVID-19 lockdowns this year, and the conversion rate from an advert to a purchase was three times higher with the try-ons, Ms. Rochet said.
Consumers used it to mimic hair dye colors in particular during coronavirus shutdowns, Ms. Rochet added.
Many countries in Europe including France and Belgium have now re-entered lockdown, forcing beauty chains and hair salons to close, and hitting travel retail sales.
Online sales of beauty products, especially in China, have made-up for part of the losses and Ms. Rochet expects half L’Oreal’s sales are likely to come from the web within the next three to seven years, up from around a quarter now. — Reuters
WASHINGTON — The Federal Reserve kept its loose monetary policy intact on Thursday and pledged again to do whatever it can in coming months to sustain a US economic recovery losing speed amid a spreading coronavirus pandemic and facing uncertainty over a still-undecided presidential election.
The economy is still growing but “I would not say that anybody is feeling comfortable about this,” Fed Chair Jerome Powell said in a news conference after the Fed’s latest two-day policy meeting. “We’ve gotten through the first five, six months of the expansion better than expected … But we have to be humble where we are relative to this disease. It has not gone away.”
The short-term outlook is also clouded by doubts about where fiscal policy may be headed in coming weeks, or how smooth a possible transition would be between an incoming Democratic administration led by Joseph R. Biden and a lame-duck administration led by Republican President Donald J. Trump that will still hold sway over upcoming decisions on funding the government and extending the US central bank’s emergency programs.
Mr. Powell said the Fed is only now beginning to consider whether it needs to extend various emergency credit facilities beyond their Dec. 31 expiration.
Results from Tuesday’s US election were still being tabulated in a few key states, though Mr. Biden was near the minimum 270 votes in the state-by-state Electoral College needed to win the White House.
The policy statement released after the end of the Fed’s meeting did not mention the election, and Mr. Powell volunteered no commentary on the possible economic fallout from a protracted dispute over it.
But the Fed chief did say the US economy was now recovering more slowly after being boosted earlier in the year by fiscal aid and the re-opening of some businesses.
“A full economic recovery is unlikely until people are confident that it’s safe to reengage in a broad range of activities,” Mr. Powell told reporters, noting that while the housing market had fully recovered since the pandemic hit, spending on services remained low.
He also said the recent rise in coronavirus infections in the United States and abroad was “particularly concerning,” and noted that social distancing and masks were needed to help contain the virus and support the economy.
US stocks, up sharply before the Fed’s statement was released, largely held their gains to close higher on the day. Yields on US Treasury debt securities were little changed, and the dollar remained weaker against a basket of major trading partners’ currencies.
RISKS TO RECOVERY
In a statement virtually unchanged from the one issued at its September policy meeting, the Fed’s policy-setting Federal Open Market Committee repeated its pledge to use its “full range of tools” to support the economy, and promised not to consider raising interest rates until maximum employment had been restored and inflation was heading above its 2% target.
“Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year,” it said in a unanimous statement which left the central bank’s key overnight interest rate unchanged at near zero. “The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world.”
The Fed said it would for now continue buying “at least” $120 billion per month in government bonds and use its other tools and programs as needed depending on how the economy evolves. Tamping expectations that “quantitative easing” might be ramped up in coming months, Mr. Powell said the Fed’s existing bond-buying program was debated at the just-concluded meeting and is considered to be providing an appropriate amount of economic support.
The US employment report for October, due to be released by the Labor Department on Friday, will give the latest glimpse of how quickly the economy is pulling the millions unemployed by the pandemic back into jobs.
Beyond that, the Fed will also be waiting to see whether Mr. Biden does indeed win the presidency or whether Mr. Trump manages to remain in power, and what either scenario could mean in terms of additional government spending to help those out of work.
“The risks to the economic recovery have increased since the Fed last met in September, with rising coronavirus cases, slower job growth, a lack of new stimulus for consumers and small businesses, and now an unresolved presidential election,” Greg McBride, Bankrate.com’s chief financial analyst, said in an email. “The Fed has done what they can do at this point, despite saying they have a range of tools still available.” — Howard Schneider, Ann Saphir, and Jonnelle Marte/Reuters
LONDON — A suggestion by an ethics professor at a leading UK university that governments should pay citizens to get vaccinated against COVID-19 has sparked debate over whether such incentives are ethical, or dangerous, and would boost or limit uptake.
Arguing that governments should consider a “pay for risk” approach to encourage their populations to have COVID-19 shots when they become available, Julian Savulescu, a professor at the Uehiro Centre for Practical Ethics at Oxford University, said it would allow people to make an informed choice.
“‘Anti-vaxxers’ may never be convinced to change their stance, but incentivising vaccination may persuade others who might not have done so to get the jab,” he wrote in an article in the BMJ British Medical Journal.
“The advantage of payment for risk is that people are choosing voluntarily to take it on. As long as we are accurate in conveying … the risks and benefits of a vaccine, then it is up to individuals to judge whether they are worth payment.”
With scores of potential COVID-19 vaccines in development, and a few expected to be ready for regulatory approval and possible deployment as early as next month, public health authorities are considering ways of addressing varying levels of vaccine confidence and hesitancy around the world.
Preliminary results of a survey conducted in 19 countries over the three months to August showed that only about 70% of British and US respondents would get a COVID-19 vaccine. That echoed findings in May of a Reuters/Ipsos poll that found a quarter of Americans had little or no interest in taking a vaccine against pandemic disease.
Mr. Savulescu noted precedents for payment for “civic duty”: Blood donations are paid for in several countries, he wrote.
But other experts cautioned strongly against offering financial incentives.
“Paying people to get vaccinated would set a very dangerous precedent,” said Keith Neal, an emeritus professor of infectious disease epidemiology at Nottingham University.
“Social media falsehoods would have a field day suggesting it can’t be safe if you need to be paid to have it.”
When it comes to routine childhood vaccines—such as those against contagious diseases like measles—the World Health Organization says that making them mandatory is one of the best ways to boost coverage rates. But policies that incentivize or make vaccinations compulsory for adults are rare.
Helen Bedford, a professor of child public health at University College London, said the idea was “ill-thought-out and potentially counter-productive.”
“Apart from flu vaccine for healthcare workers there is little experience globally of mandating vaccines for adults, and even less experience of providing incentives,” she said.
She said a better investment would be in encouraging uptake of COVID vaccines with “full and transparent communication.” — Kate Kelland/Reuters
BusinessWorld Insights focuses on ‘Connecting Schools and Students in the New Normal’
By Bjorn Biel M. Beltran, Special Features Assistant Editor
The world was turned upside down when the COVID-19 pandemic struck. But months into the crisis and no end in sight, leaders and policy makers have to figure out how to keep society moving along without exposing any more people to the risk of contracting the virus.
This has resulted in an impossibly difficult dilemma in the education sector. While remote learning through digital teaching platforms has been championed by experts as the solution, the challenges of making the transition from physical classrooms to virtual ones are extensive.
The third and final session of BusinessWorld Insights’ Connectivity Series aimed to highlight and dissect these challenges, focusing on the topic, “Internet, Technology and Education: Connecting Schools and Students in the New Normal”, with speakers Pamantasan ng Lungsod ng Maynila (PLM) President Emmanuel Leyco, IBM Philippines President and Country General Manager Aileen Judan-Jiao, PLDT Enterprise First Vice-President and Enterprise Revenue Group Head Victor Tria, and Tata Consultancy Services TCS iON Sales Director Shashwat Rai.
“What did the pandemic do to our education? It caused us to disperse, threaten our organization. It threw our structures into shambles. No more meetings, no more face to face. In organizations that are so used to conducting their business through face to face environments, I think this is really pulling the rug under their feet,” PLM President Emmanuel Leyco said in his opening remarks.
Mr. Leyco noted that public organizations experienced the consequences of the pandemic more severely, with additional hurdles in their processes such as procurement and their decision-making. However, the biggest impact of the pandemic, according to him, was the damage to their ability to communicate.
“For teaching, the learning environment must include engagement with the students. You have to look at them. They have to look at you, you have to read their body movements. If they are listening, if they are learning, if they are interested. You have to adjust. This is very different in an online environment,” he said.
“Teaching is not just talking. Teaching is communicating with students, and the students communicating back.”
The significance of the problem, that of shifting from an established method of teaching into a new one, is far greater than meets the eye. The education sector is at the crux of a grander, more ubiquitous change: a paradigm shift that integrates the digital world with everyday life.
IBM Philippines President and Country General Manager Aileen Judan-Jiao said that educational institutions today need to equip students with new skills that are more suited to a digital economy.
“We have a strong point of view that the future of jobs is really in the digital economy, which now all of us are exposed to,” she said.
“The digital economy will beg different sets of skills. We are talking about cloud computing, artificial intelligence, cybersecurity, among a good number of things. In fact, it is on us to look at a new set of soft skills, around creative problem solving, critical thinking, design thinking for methodologies, even mindfulness.”
Recognizing this need, IBM collaborated with educators, policy makers, and elected officials around the world to develop Pathways in Technology Early College High Schools (P-TECH), a global education model that offers students all over the world the opportunity to develop skills and competencies that will translate directly to competitive careers.
Telecommunication companies like PLDT-Smart are also doing what they can to alleviate the pressure on education facilities making the transition.
PLDT Enterprise First Vice-President and Enterprise Revenue Group Head Victor Tria had this to say, “E-learning has been one of PLDT’s main areas of focus during this pandemic. We’ve taken on the mantra, ‘No learner left behind.’ It serves as a challenge to us in the PLDT Group, and a promise to our customers.”
He added that the company is choosing to remain optimistic amidst the current situation’s many challenges, seeing the changes a path towards equitable education for all Filipinos.
PLDT is collaborating with local government units and public schools to provide free access to learning tools to teachers and students, such as DepEd’s learning management system, a system which benefits over eight million users today. The company is also in partnership with organizations like the Catholic Education Association of the Philippines and the Philippine Association of Colleges and Universities.
Tata Consultancy Services TCS iON Sales Director Shashwat Rai in his talk discussed how the COVID-19 pandemic affected the four key stakeholders in the education problem: Students, teachers, parents, and institutions.
“This pandemic has brought a lot of opportunities in terms of how institutions are adopting or how the stakeholders are responding,” he said.
He proposed reimagined classrooms that use technology to augment the educational foundation of schools, colleges, and universities; such as in using remotely proctored and secured assessments for students; using click stream analysis to measure engagement from both teachers and students; and using sophisticated communication to keep all stakeholders connected.
#BUSINESSWORLDINSIGHTS Connectivity Series is made possible by Tata Consultancy Services, Globe, AMTI, Dell Technologies, PLDT, Smart The Philippine STAR, and Olern; with the support of the Philippine Chamber of Telecommunications Operators, Management Association of the Philippines, Bank Marketing Association of the Philippines, British Chamber of Commerce Philippines, Financial Executives of the Philippines, Philippine Association of National Advertisers, and Philippine Chamber of Commerce and Industry.
Pork prices have been rising as supply was affected by the outbreak of African swine fever. — PHILIPPINE STAR/MICHAEL VARCAS
THE OVERALL year-on-year increase in prices of widely used goods rose to its fastest pace in three months in October, the government reported on Thursday.
Preliminary data from the Philippine Statistics Authority (PSA) showed headline inflation at 2.5% in October, picking up from the 2.3% pace the month before.
The October inflation result marked the fastest pace in three months or since the 2.7% reading in July 2020.
The latest headline figure is higher than the 2.4% median in a BusinessWorld poll conducted late last week and falls within the 1.9-2.7% estimate given by the Bangko Sentral ng Pilipinas (BSP) for October.
Year to date, inflation settled at 2.5%, still within the BSP’s 2-4% target this year, but above the 2.3% forecast for the entire year.
Core inflation, which discounted volatile prices of food and fuel, stood at three percent in October — slower than the 3.2% in the previous month, but faster than the 2.6% a year earlier. It averaged 3.1% so far this year.
The PSA attributed the pickup in October to the faster increase in prices of food and non-alcoholic beverages at 2.1% from 1.5% in September. Food and non-alcoholic beverages account for 38.3% of the theoretical basket of goods that an average Filipino household consumes.
The PSA also noted faster annual rates in the indices of education (1.2% from one percent in September) and restaurant and miscellaneous goods and services (2.4% from 2.3%).
In a statement, the National Economic and Development Authority (NEDA) said October inflation remains within the government’s target, but noted “upside risks” such as the impact of typhoons and ongoing outbreaks of African swine fever (ASF) in parts of the country.
“Aside from the ongoing pandemic, the country has been facing adverse weather conditions in the recent months. Effects of typhoons and La Niña on the agriculture sector and food prices pose upside risks to inflation,” Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua was quoted in the statement as saying.
The food-alone index likewise accelerated to 2.1% versus the previous month’s 1.5%. This marked the first time food prices picked up following five consecutive months of slowing down.
In particular, rates for the indices of fish as well as oils and fats quickened to 3.7% and 2.5%, respectively, from 2.6% and 2.4%. The index for meat also quickened to 4.7% from 2.9%.
Meanwhile, the October inflation for the bottom 30% of households slightly picked up to 2.9% from 2.8% in September and a 0.1% decline in October 2019.
In a note, ING Bank N.V. Manila Branch Senior Economist Nicholas Antonio T. Mapa attributed the inflation uptick to “supply side factors,” citing for instance the ASF outbreak that pushed prices of pork higher.
“Meanwhile, base effects were also one reason for the bounce in inflation with October 2019 representing the low point for last year’s inflation swoon,” Mr. Mapa said.
University of Asia and the Pacific (UA&P) Senior Economist Cid L. Terosa noted the increase in prices of food and essential services, as well as the increasing trend towards online transactions, activities, and services that “pushed demand and prices for required equipment and facilities.”
“Meanwhile, many business and personal services incurred greater costs because of the need to follow and maintain best health practices to ward off an uncontrollable increase in COVID-19 cases. These incremental costs could have been passed on to consumers,” he added.
In a note sent to reporters, ANZ Research Chief Economist Sanjay Mathur and Kanika Bhatnagar viewed the rise in food prices and overall inflation as a “one-off event that should moderate over the next few months.”
“We continue to expect overall price pressures to remain mild and not present any challenge to the current monetary policy stance,” they said.
In a statement, the BSP affirmed the latest inflation results as being consistent with their “prevailing assessment of favorable inflation dynamics over the policy horizon.”
“The balance of risks continues to lean toward the downside due largely to the impact on domestic and global economic activity of possible deeper economic disruptions caused by the pandemic,” the BSP said.
RATES LIKELY ON HOLD Meanwhile, the BSP is expected to keep policy settings unchanged in its next Monetary Board meeting on Nov. 19, before its final meeting for the year on Dec. 17.
The BSP has slashed key policy rates by 175 basis points (bps) this year to support the economy amid the pandemic. This has brought down the overnight reverse repurchase, lending, and deposit facilities to 2.25%, 2.75%, and 1.75%, respectively.
“Interest rates are already at record-lows, and the economy is still on the very early stages of a recovery,” HSBC Global Research Economist Noelan Arbis said in a note, adding that a policy rate cut of 25 bps is expected as early as the first quarter of 2021.
“Bank lending growth also continues to decline, despite low interest rates and ample liquidity in the market, which suggests that corporate and individual borrowers remain wary of adding leverage given ongoing economic uncertainties. This means that a containment of the virus domestically and a re-opening of the economy are likely to be prerequisites before additional rate cuts lead to a pickup in loan growth,” he added.
ING’s Mr. Mapa also expects the interest rate cuts to be put on hold.
“Governor [Benjamin E. Diokno] has reiterated that he would likely keep policy rates untouched over the course of the next two quarters with real policy rates now negative (-0.25%) and after rolling out a series of aggressive rate cuts in 2020. He did note that he would take the latest inflation reading and next week’s [third-quarter] GDP report into consideration at their next policy meeting, but we forecast a pause from BSP well into 2021,” Mr. Mapa said.
“We expect inflation to settle at 2.4% for the year as anemic domestic demand to keep a lid on price gains with BSP content with providing liquidity support via its bond purchase program to help stimulate recovery,” he added.
For UA&P’s Mr. Terosa: “The monetary policy stance will remain to be cautiously expansionary in character. This means that monetary policy will accommodate quick adjustments to either inflationary or deflationary trends based on disciplined and evidence-based monetary policymaking.” — Jobo E. Hernandez with inputs from Beatrice M. Laforga and Luz Wendy T. Noble
THE OVERALL year-on-year increase in prices of widely used goods rose to its fastest pace in three months in October, the government reported on Thursday. Read the full story.
THE PHILIPPINE economy might take two years to return to its pre-pandemic level, Bangko Sentral ng Pilipinas Governor (BSP) Benjamin E. Diokno said on Thursday.
Third-quarter gross domestic product (GDP) data set to be released next week by the Philippine Statistics Authority will be “much better” than the record 16.5% contraction in the second quarter, Mr. Diokno said in a briefing.
“We expect the economy to bounce back by 6.5-7.5% (in 2021) but that means we have not yet fully recovered. [There will be] recovery next year but we will be back to our 2019 GDP by 2022,” he said.
At the same time, the International Monetary Fund (IMF) said it is seeing early signs of improvement in Asia-Pacific economies, but expressed concern as some countries, including the Philippines, are still facing challenges in curbing the rise in coronavirus disease 2019 (COVID-19) infections.
“We see patches of green shoots, but recovery is by no means entrenched… It is still alarming to see these countries — India, Philippines, Indonesia, and also Nepal are still seeing some increase [of cases] in this pandemic,” Chikahisa Sumi, director of the IMF’s Regional Office for Asia and the Pacific, said in a briefing on Thursday.
Economies in Asia and the Pacific will have “varying speed of recovery,” depending on the extent of the pandemic’s impact, he said.
The IMF projects the Philippine economy will shrink by 8.3% this year, a more pessimistic outlook than the 4.5% to 6.6% contraction estimate by the government. It expects the Philippines to grow by 7.4% in 2021.
The Health department on Thursday reported 1,594 new cases, bringing the total to 389,725, while the death toll stood at 7,409. The Philippines has the second highest number of COVID-19 cases and deaths in Southeast Asia after Indonesia.
The pandemic has battered economies in the region, as seen with the rise in job losses and decline in remittances.
“Remittances have been very hard hit because the immigrant workers in, say, US and advanced economies, because the activities have been shrinking — many of them have lost jobs or they have come back home. Those have a very big impact to Asian countries’ current accounts,” Mr. Sumi said.
In the Philippines, remittance inflows declined 2.6% year on year to $19.285 billion in the first eight months of 2020. The BSP expects cash remittances to drop by 2% this year due to the impact of the pandemic.
Meanwhile, the current account — which includes economic interactions such as trade in goods and services, remittances from migrant Filipino workers, profit from Philippine investments overseas, interest payments to foreign creditors, and grants from abroad — stood at a surplus of $4.4 billion in the first half of the year, as imports slumped.
As the pandemic drags on, Mr. Sumi said emerging economies are faced with a smaller fiscal space compared with advanced economies in Asia.
“What they [emerging markets] can do using the expenditure and tax relief is somewhat limited to 4% of GDP,” Mr. Sumi said. In comparison, advanced Asian economies spent about 25% of their GDP on average for expenditures and policies for the pandemic response.
Based on the IMF’s policy tracker, fiscal response in the Philippines reached P595.6 billion, or about 3.1% of the GDP. Signed into law in September, Republic Act No. 6953 or Bayanihan to Recover as One Act allocated an additional P165 billion, equivalent to about 0.8% of the GDP,for the pandemic response.
Mr. Sumi said fiscal measures should be geared towards ensuring the healthcare system remains intact and the virus is contained.
“It’s not a trade-off. The economy cannot start unless the health condition is under control,” he said. — Luz Wendy T. Noble
The outsourcing sector suffered around P120 billion in losses due to missed opportunities and unplanned expenses during the lockdown. — BLOOMBERG
THE OUTSOURCING SECTOR lost around P120 billion due to missed opportunities and unplanned expenses during the lockdown, an industry group said.
Information Technology and Business Process Association of the Philippines (IBPAP) President and Chief Executive Officer Rey E. Untal said the industry has been spending on employee accommodations, shuttle services, and work-from-home requirements in the past eight months of lockdown.
The amount also includes revenue losses due to reduced operational capacity, Mr. Untal said at the first day of the International Innovation Summit 2020 on Wednesday.
The government allowed outsourcing firms to continue operations during the stricter lockdown, provided that they offer accommodation and shuttle services to employees working on-site as safety measures during the public health crisis. Organizations were also encouraged to implement work-from-home measures.
Mr. Untal in June said that companies were not able to scale operations to full capacity because of limitations in internet and data protection for at-home work.
But operations have since increased, with over 95% of employees working either at home or on site, Mr. Untal said at Wednesday’s summit. Only half of the outsourcing workforce were productive at the start of the lockdown in March, with 40% working from home and 10% working on site.
The pandemic could, however, further temper the industry’s revenue projections, which were lowered last year.
IBPAP in November last year tempered its revenue target to a 3.5-7.5% compounded annual growth rate to $29-32 billion for 2020 to 2022. The goal was originally set at nine percent in 2016, but was revisited due to the effects of geopolitical changes, automation, protectionist policies, and rapid transformation of business models on the industry.
The industry made $26.3 billion in revenues last year, or 7.1% higher than the previous year. This put growth at the higher end of the industry group’s tempered projections, Mr. Untal said.
“But as we enter 2020, we were confronted with a new set of obstacles that affected not just the Philippines but the rest of the world as well,” Mr. Untal said.
“The rapid spread of the coronavirus disease pushed governments to implement strict lockdowns that curtailed economic activity and severely impacted unemployment, which unfortunately, had immediate and devastating effects on global economies,” he added.
IBPAP may release its new official revenue and employment projections by Nov. 20, but a “pulse” survey on 70 member companies in June found that 18% of respondents expect revenues to contract and 36% sees business will remain flat this year.
The companies that expect contraction represent four percent of the total employee headcount of the polled companies, as Mr. Untal explained that smaller companies have a “difficult time” because they are harder hit by the loss of contracts.
Around 46% of the surveyed companies anticipate 3-7% growth this year.
Although the sector is not quite back to “business as usual,” Mr. Untal said the industry is one of the sectors that remained operational and continues to provide employment.
“There are over 30,000 job openings across the different sub-sectors, and since we’re basing this off on what is only available as public information plus select conversations with some country heads, we believe this number to be actually higher.”
The number of full-time employees in outsourcing grew 5.8% to 1.3 million people last year. The compound annual growth rate of employment for 2020-2022 was tempered in November last year to 3-7% to 1.42-1.57 million full-time employees, compared with an eight percent previous projection.
An outsourcing workers group in August asked the government to impose stricter penalties on companies that violate workplace health safety. — Jenina P. Ibañez
Factory output continued to slump in September. — REUTERS
THE COUNTRY’S factory output contracted for the seventh straight month in September, the Philippine Statistics Authority (PSA) reported on Thursday.
Preliminary results of the PSA’s latest Monthly Integrated Survey of Selected Industries showed factory output, as measured by the Volume of Production Index (VoPI), contracted by 8.4% year on year in September.
This was slower than the revised nine-percent decline in August, but was faster than the 6.5% contraction in September 2019.
Year to date, the drop in factory output averaged 12.1% compared with the 8.9% slide in 2019’s comparable nine months.
The PSA attributed the slower decline to double-digit expansions observed in basic metals and food manufacturing with annual rate increases of 14.4% (from -2.6%) and 10.2% (from -3.3%), respectively.
The statistical agency also pointed to the “slower drop” in the indices of 10 industry groups compared with the previous month, such as beverages (-8% from -13%); textiles (-23.8% from -27.5%); footwear and wearing apparel (-33.8% from -36.4%); leather products (-55.2% from -55.8%); and wood and wood products (-36.3% from -37.6%).
Average capacity utilization— the extent to which industry resources are used in the production of goods— averaged 67.6% in September from 67.2% the previous month.
Only eight of the 20 sectors registered capacity utilization rates of at least 80%.
“September 2020 can be characterized as the month when the government has become more definite on what kind of quarantine policy will be implemented, COVID-19 (coronavirus disease 2019) cases have been becoming predictable, and the market has adjusted to the lingering effects of the pandemic. Hence, the degree of uncertainty has been reduced, although there are still some uncertainties,” Asian Institute of Management Economist John Paolo R. Rivera said in an e-mail.
“The availability of more definite information enabled manufacturers to be a bit more aggressive in spending for production. For example, urban areas like NCR (National Capital Region) are not moving in and out of different quarantine classifications anymore,” he added.
In a separate e-mail, Security Bank Corp. Chief Economist Robert Dan J. Roces noted improved activity brought by looser quarantine measures as shown by the slower decline in September.
“Taking a look at month-on-month changes, total manufacturing actually improved by 4% in September, or faster than the July-August rate of 2%, and suggesting improved economic activity likely on looser quarantine measures and better aggregate demand for the month. This also marks the fifth straight month of increased total production to reflect a gradual recovery scenario from the lows in April,” Mr. Roces said.
Barring “downside risks” such as a resurgence in COVID-19 cases and a re turn tostrict lockdown, he said this recovery could likely be sustained until the end of the year.
“However, some sectors could recover slower than others while others improve, as there seems to be clustering in the meantime in terms of manufacturing output which also reflects the tenuous position of demand for certain products; this reflects a k-shaped trajectory of the gradual recovery prospects of the manufacturing sub-sectors,” he said.
For AIM’s Mr. Rivera: “[A]s the Philippine economy opens more industries and sectors [and] relaxes quarantine restrictions, hopefully more jobs will return… and demand will increase, thereby prompting for increased production activities especially in the coming holiday season.”
“We are on our way to recovery, albeit at a managed rate,” he said. — Lourdes O. Pilar
PLDT, Inc. on Thursday reported a 95% growth in its attributable net income for the third quarter, noting that the period was an “all-time high” across its different business segments because of the spike in customer demand for digital services.
In a disclosure to the stock exchange, PLDT posted an attributable net income of P7.41 billion, up from the P3.79 billion it generated in the same period last year.
PLDT saw a 10% increase in its revenues to P46.49 billion. Broken down, service revenues grew 9% to P44.37 billion, while non-service revenues increased 18% to P2.12 billion.
“For the third quarter alone, consumer wireless took in revenues of P21 billion, or 15% higher; enterprise recorded P10.6 billion, 8% more, while the home segment produced P10.7 billion, a 16% gain,” the company said in a statement.
These brought the telco’s nine-month attributable net income to P19.69 billion, 23% higher than last year’s figure. Revenues also grew 7% to P133.22 billion.
Segmented, service revenues went up 7% to P127.85 billion, while non-service revenues declined 1% to P5.37 billion.
“Data and broadband revenues led the growth in service revenues, reaching P90.8 billion, an 18% increase in the first nine months, with mobile internet and home broadband rising 31% and 14%, respectively,” PLDT said. Data and broadband accounted for 72% of PLDT’s service revenues.
Also for the nine-month period, the telco’s revenues from the consumer wireless segment grew 15% to P60.8 billion. The enterprise segment saw a 6% revenue climb to 30.9 billion. Home generated P30.3 billion, up 10% from a year ago.
PLDT Chairman and Chief Executive Officer Manuel V. Pangilinan expects a better performance for the last quarter of the year.
“We’re forecasting better numbers for 2021,” he also said at an online briefing on Thursday.
Mr. Pangilinan likewise disclosed that the company is no longer pursuing investments in Sky Cable Corp., a subsidiary of ABS-CBN Corp.
“We have withdrawn from the bidding process, at least as we understand it, for SkyCable. The main reason if I may say this, is that there are other commercial reasons why we did that. But I think the main reason that we did that is on review of the Bayanihan Act II,” he said.
“The PCC (Philippine Competition Commission) has the ability to review mergers and acquisitions one year after the effectivity of the act and possibly reverse agreements… Of course, we’re concerned that that risk might arise. The risk is there and the prospect of divestment might be real and we decided not to attract that risk,” Mr. Pangilinan added.
To recall, PLDT announced in September that it was exploring opportunities in Sky Cable Corp.
The Bayanihan To Recover As One Act (Bayanihan II) signed by President Rodrigo R. Duterte on Sept. 11 exempts mergers and acquisitions from compulsory notification “with transaction value of less than P50 billion which are entered into within two years” from effectivity of the law.
The PCC in a statement said the new law also suspends its “exercise of motu proprio review of these mergers and acquisitions for a period of one year.”
Shares in PLDT closed 1.06% higher at P1,340 apiece on Thursday.
SAN MIGUEL Corp. (SMC) posted a net income of P15 billion in the third quarter, up from the P13.54 billion it reported the same period last year, as its business units started bouncing back after subdued demand earlier in the year.
In a statement Thursday, the company said it returned to profit after posting a net loss of P4 billion in the first six months of 2020 due to the relaxation of quarantine rules in Metro Manila and key cities.
However, on a year-to-date basis, SMC’s net income remains down 73% to P10.75 billion, based on a presentation to investors uploaded on its website on Thursday.
Net sales during the nine months is lower by 30% at P531.13 billion, while operating income is down 53% to P41.46 billion.
By business segment, SMC Global Power Holdings Corp. generated the largest net income year-to-date at P14.48 billion, up to 27% from last year. The bottomline growth came amid a 16% decline in revenues at P87.87 billion.
The food and beverage group, through San Miguel Food and Beverage, Inc., posted a net income of P14.36 billion, down 37% from a year ago. Net sales likewise slid 14% to P194.56 billion.
The slowdown is largely due to the beer and food segments, which posted a 44% income decline to P11.08 billion and a 13% income decline to P1.55 billion, respectively. This offset the 67% income growth of Ginebra San Miguel, Inc.
SMC’s fuel business, through Petron Corp., posted a consolidated net income of P1.63 billion for the third quarter, but remained unprofitable for the nine-month period with a P12.61-billion net loss.
The improvement in the three months was attributed to stabilizing world crude prices and the relaxation of lockdown protocols since the end of the second quarter. Petron has also come back to normal operations since August.
SMC’s infrastructure business, which operates toll roads across the country, recorded improved traffic quarter-on-quarter, but still 37% down on a nine-month basis. It generated revenues of P10.3 billion, down 42% from last year.
“The country has proven its adaptability and resilience in these trying times, and we, in San Miguel Corp., will continue to deliver on our commitment to help the country build back better and stronger as we emerge from this pandemic,” SMC President and Chief Operating Officer Ramon S. Ang said in the statement.
SMC shares picked up P1.30 or 1.27% to close at P104 apiece on Thursday. — Denise A. Valdez
ABOITIZ Power Corp. has scheduled the two units of a subsidiary’s 1,336-megawatt (MW) supercritical coal-fired power plant in Dinginin, Bataan to start operating commercially around the middle of next year.
In a statement late on Wednesday, the listed energy company said the first unit of GN Power Dinginin Ltd. Co. is set to synchronize with the grid by the end of the year and start operating by the second quarter of 2021.
The second unit will be synchronized and start earning commissioning revenues by the second quarter of next year. It is scheduled to start operating commercially by the third quarter. The two units have an identical capacity.
AboitizPower, which accounted for nearly half of Aboitiz Equity Ventures, Inc.’s income as of the third quarter, said its ownership of the plant allows it to surpass its 4,000-MW target “attributable” capacity while serving the country’s base load energy demand.
AboitizPower did not give details on its attributable capacity or its share in the new energy generating project. GNPower Dinginin is a joint venture of AC Energy, Inc., AboitizPower subsidiary Therma Power, Inc. and Power Partners Ltd. Co.
On its website, the GNPower Dinginin claims to be the “biggest coal-fired power plant” to be built in the Philippines. It currently has contracts with 30 distribution utilities and two retail electricity suppliers.
The target commercial run of the power plant comes as AboitizPower suffered a 32% fall in its third-quarter consolidated net income to P3.3 billion.
For the three quarters to September, its net income plunged by 48% to P7 billion, including non-recurring gains. Without the one-off gains, its core net income was down 53% to P6.5 billion.
Emmanuel V. Rubio, president and chief executive officer of AboitizPower, said in a virtual media briefing on Wednesday evening that the company’s third-quarter performance was 39% better than the second quarter partly due to the availability of more coal facilities and the easing of lockdown measures.
“This was on account of higher availability of our coal facilities, better hydrology [in preparation for] La Nina for the rest of the year until Q1 of 2021, and higher customer demand given the looser quarantine,” Mr. Rubio said.
However, he noted that earnings before interest, taxes, depreciation, and amortization (EBITDA) were pushed back by 11% year on year because of lower demand due to the global health crisis, and lower water inflows in the company’s hydro facilities.
He added that AboitizPower paid more taxes during the third quarter of the year since its income tax holidays had expired during that period.
“The pandemic has significantly impacted our financial performance, but we have sustained the delivery of much-needed energy products and services to our customers and our communities,” Mr. Rubio said.
He also talked about the company’s growth strategy in the next decade, which focused on “significantly growing their renewables portfolio and shifting their energy mix into a 50-50 ‘Cleanergy’ and thermal capacity.”
The AboitizPower executive said that, moving forward, the company aims to focus on environmental sustainability as it implements its 10-year strategy.
AboitizPower shares on Thursday closed at P27.15 apiece, a 1.69% increase from its previous finish. — Angelica Y. Yang
