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Revenue index slumps to record low

A COMPOSITE INDEX measuring sales generated by Philippine companies across all industries posted its biggest decline on record in the second quarter, as most business operations were disrupted by lockdown restrictions, the Philippine Statistics Authority (PSA) reported on Thursday.

Data from the PSA’s Quarterly Economic Indices (QEI) report showed total gross revenue index, which measures sales earned by companies, contracted by 26.8% in the three months to June when the economy was pummeled by the coronavirus pandemic and subsequent lockdown. This was faster than the 6.9% decline in the previous quarter and a reversal of the 6.2% growth in the second quarter of 2019.

The second-quarter reading marked the index’s biggest contraction based on available quarterly data dating back to 2000, with 2016 as base year.

Of the eight sectors in the index, only financial and insurance activities posted year-on-year growth with 10.1% in the second quarter, albeit this was slower than the 12.5% expansion in the same quarter last year.

Meanwhile, the biggest decline in revenues was observed in the transportation, storage and communication sector, which fell by 44.7% compared with a 6.2% growth last year.

Other sectors also saw drastic declines in revenues, such as real estate (-35.8% from 7.6%), manufacturing (-35.3% from 1.8%), mining and quarrying (-29.1% from 4%), trade (-20.8% from 13.2%), and electricity, gas and water supply (-15.5% from 9.7%).  

Meanwhile, the employment index further contracted by 15.1% in the second quarter from the 1.7% dip logged in the previous quarter and the 1.9% growth in the second quarter of 2019.

All sectors saw their employment indices slip during the period. The construction sector had the biggest drop in employment at -29.6%, followed by transportation, storage and communication (-18.8%), manufacturing (-15.2%), and mining and quarrying (-11.2%).

The total compensation index likewise slumped 14.4% in the April-June period from a 6.7% growth a year earlier, led by transportation, storage and communication (-31.1%), construction (-26.8%), manufacturing (-20.5%), other services (-14.3%), mining and quarrying (-14.3%), trade (-13.4%), and real estate (-8%).

On a per-employee basis, compensation inched up 0.9% from last year using current prices. At constant 2016 prices, however, it went down by 1.3%.

In an e-mail, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the steep decline in gross revenues reflected the economy’s GDP performance during the period.

“At 16.5% decline for [second-quarter] GDP, it is hard not to imagine that the gross revenue index for the same period would have the same fate,” Mr. Asuncion said.

“Looking at the numbers, the same sectors of the economy suffered the same declines beginning with transportation, storage and communication. Note that much of services registered parallel declines mirroring Q2 GDP, followed next by manufacturing,” he added.

The second-quarter GDP performance sent the Philippine economy to a recession for the first time in nearly three decades. In the April-June period, GDP plunged by 16.5% — the sharpest decline since the 10.7% drop recorded in the third quarter of 1984.

Among the sectors that posted the biggest drop in their gross value added include accommodation and food service activities (-68%), other services (-63%), transportation and storage (-59.2%), construction (-33.5%), mining and quarrying (-24.5%), and manufacturing (-21.3%).

Meanwhile, the country registered an unemployment rate of 10% in the July round of the PSA’s labor force survey, easing from the 17.7% rate in April but still higher than the 5.4% jobless rate in July 2019. This translated to 4.571 million jobless Filipinos in July versus 7.254 million in April and 2.437 million in July last year.

In a separate e-mail, ING Bank N.V. Manila Senior Economist, Nicholas Antonio T. Mapa expects a slight pick up in employment and compensation despite the “broad-based” decline in the gross revenue judging from the government’s recent jobs data.

“Compensation, however, will still likely be lower on a year-on-year basis,” he said.

Rajiv Biswas, IHS Markit Asia Pacific chief economist, expects the gross revenue index to recover in the coming quarters.

“Although the continuing high number of new COVID-19 (coronavirus disease 2019) cases will continue to constrain the pace of recovery, gradual improvement in economic momentum is expected during the remaining months of 2020, with strong positive economic growth forecast for the 2021 calendar year,” Mr. Biswas said. — Ana Olivia A. Tirona

Manila falls to near bottom of global ‘smart cities’ list

By Arjay L. Balinbin, Senior Reporter 

THE Philippine capital slipped 10 spots in the Global Smart City Index released on Thursday by the Switzerland-based Institute for Management Development (IMD), as residents expressed concern over traffic jams, corruption and air pollution.

Manila ranked 104th out of 109 cities in the IMD’s Smart City Index 2020, down from 94th spot last year. It also received the lowest rating of “D” as a smart city as compared with last year’s “C.”

The index also showed Manila had the worst ranking among eight cities in Southeast Asia and 34 cities in East Asia and the Pacific.

“Residents in Manila consistently identified air pollution, road congestion and unsatisfactory public transport services as major problems, while often also highlighting corruption of public officials. These elements majorly contributed to the drop in the ranking of the city in this year’s Smart City index,” Christos Cabolis, chief economist at IMD Business School in Switzerland and Singapore, told BusinessWorld in an e-mail interview.

The IMD survey, conducted from May to April this year, covered 120 residents in each city. IMD said the ranking “measures the perception of citizens in terms of the impact of technology on their quality of lives.” 

Based on the survey results, 54.8% of Manila residents perceived road congestion as the most urgent concern in the city, followed by corruption (54.4%), health services (48%), air pollution (46.8%), and unemployment (45.2%).

The study considered health and safety, mobility, activities, opportunities, and governance as key indicators for the provision of both technologies and structures in each city. 

On the city’s availability of technologies for health and safety, Manila scored the highest (67 points out of 100) on the provision of CCTV cameras, which respondents claimed made them feel safer. Manila scored lowest (38) on the availability of a website or application that would allow residents to effectively monitor air pollution.

In terms of mobility, Manila got a 66.3 score for online scheduling and ticket sales, as well as traffic information on mobile phones. It scored 49.1, its lowest score for this indicator, on the availability of apps that can direct residents to an available parking space. 

Manila received a score of 77.9 for the activities indicator, particularly on the availability of online platforms to buy tickets to shows and museums.

Under the opportunities indicator for both work and school, Manila received its highest score (82.2) on the provision of online access to job listings, followed by online services provided by the city (69.9), and information technology skills (65.7) being taught in schools. The lowest score (53.7) was on the current internet speed and reliability. 

For the governance indicator, Manila got its highest score (72.4) on the online processing of identification documents, which residents perceived to have reduced waiting times, followed by the provision of an online platform (53.6), where they can propose ideas. Its lowest score (49.5) is on the availability of online public access to city finances, which respondents thought should reduce corruption. 

POLLUTION, CORRUPTION 

Manila scored low on the index’s mobility indicator, with road traffic being rated a dismal 10.6 out of 100. Its other low scores were on air pollution (15) under the health and safety indicator, corruption of city officials (20.4) under governance, and public transport (30.6) under mobility.

On the other hand, Manila scored high (72) for job generation by businesses and (61.3) for the availability of employment finding services, both under the opportunities indicator.

Mr. Cabolis said the local government should implement projects to address these concerns. “Implementing projects that tackle these elements will lead to improvements — but also of importance is notifying citizens once they are implemented and  how these incremental improvements fit into the long-term roadmap,” he added.

Mr. Cabolis noted the pandemic-driven efforts by both the government and the private sector to digitize schools, transportation, and even government services this year are “important developments,” as they tackle the “immediate problem of social distancing in a dense city and will provide the framework for future improvements.

“Online learning has the potential to dramatically improve the education of the poorest schools by giving access to the country’s best educators, while providing online government services has the potential to remove even the suspicion of corruption,” he said. 

For Infrawatch PH Convenor Terry L. Ridon, Manila’s low ranking in the index is “an indictment of the Duterte administration’s ‘Build, Build, Build’ program.”

“More than halfway into Mr. Duterte’s term, road congestion in Metro Manila has not been resolved, and the major infrastructure projects recently inaugurated had all originated in the previous administration. There are also questionable projects such as the Manila Bay beach nourishment project that has been plagued with health, environmental and transparency issues, particularly because this is not even in the bay’s master plan. This disconnect on infrastructure priorities is exacerbated by poor health and employment outcomes during the course of the pandemic,” said Mr. Ridon, a former chairman of the Presidential Commission for the Urban Poor, via e-mail. 

For Mr. Ridon, it is a “serious concern” that Manila ranked last among major ASEAN cities such as Jakarta, Hanoi, Ho Chi Minh, Bangkok, Kuala Lumpur and Singapore. 

“It should give us pause if cities in countries with lower 2019 GDP (gross domestic product) per capita, such as India and Vietnam scored higher rankings than Metro Manila. In fact, even cities in countries with lower 2019 GDP growth had far outranked the country’s primary metropolitan center. Cities in Colombia, Brazil, Chile, Mexico and Argentina had city higher rankings, despite having less than 4.6% growth, some even experiencing negative growth,” he said.

Claro dG. Cordero, Jr., director and head of research at Consulting & Advisory Services, Cushman & Wakefield, said the coronavirus pandemic played a major role in the individual responses, given the urgency of concerns by the respondents. 

“These urgent concerns validate the growing demand for a ‘live-work-play-learn’ environment empowered by technology. Technology has assisted in crafting micro-city designs to address the need for healthy and urban lifestyle. The growth in the number of masterplanned developments in the Philippines has certainly helped in answering this demand. However, outside of these masterplanned developments, the lack of evolving urban planning and efficient technology are quite evident — and made even more apparent by the challenges brought by the pandemic,” Mr. Cordero said via e-mail.

He said the government should consider further enhancing the role of technology in governance in order for its citizens to change their perspectives. 

Joey Roi H. Bondoc, a senior research manager at Colliers Philippines, said the lockdown and pandemic provide opportunities for the Philippines to improve its ranking and become a “more attractive” property investment destination in the region.

“We believe that proper masterplanning complemented by public and private infrastructure implementation should improve Manila’s ranking moving forward. These measures will help in solving major issues in Metro Manila, including road congestion, air pollution, and unemployment,” Mr. Bondoc said in an e-mailed reply to questions.

Top tycoons’ fortunes dive as economy tanks

THE country’s richest are also feeling the pinch from the coronavirus disease 2019 (COVID-19) pandemic and the economic slowdown, as Forbes reported the collective wealth of top tycoons declined by 22% to $60.6 billion.

According to the 2020 Forbes Philippines Rich List released on Thursday, 32 out of the 50 tycoons saw a drop in their net worth this year as the economy shrank by a record 16.5% in the second quarter.

“Despite having one of the world’s strictest lockdowns, the Philippines saw its COVID-19 cases surpass 250,000 in September, the highest number in Southeast Asia. The country’s benchmark stock index… reflected the economic challenges the pandemic poses, falling 26% since fortunes were measured a year ago,” Forbes said in a statement. 

The Sy siblings of the SM Group topped the Forbes’ list with a net worth of $13.9 billion, even if their fortune was cut by $3.3 billion. The Sy siblings, namely Teresita, Elizabeth, Henry Jr., Hans, Herbert and Harley, inherited their wealth from their father and SM founder Henry Sy, Sr. who died in January 2019.  

Manuel B. Villar, Jr., a property tycoon and former senator, ranked second with a net worth of $5 billion. The chairman of listed Vista Land & Lifescapes, Inc. saw his wealth reduced by $1.6 billion, but remained to be the richest individual on the Forbes list.

International Container Terminals Services, Inc. Chairman and President Enrique K. Razon, Jr. moved up to the third spot with $4.3 billion, 16% lower than last year’s $5.1 billion. 

JG Summit Holdings, Inc. President and Chief Executive Officer Lance Y. Gokongwei and his siblings debuted in fourth place with a net worth of $4.1 billion. The Gokongwei siblings replaced their father John L. Gokongwei, Jr. who passed away in November. 

On fifth spot is Jaime Zobel de Ayala, whose children control one-third of the Ayala Group, with a net worth of $3.6 billion.

Alliance Global Group, Inc. Chairman Andrew L. Tan ranked sixth with $2.3 billion, followed by LT Group Chairman Lucio C. Tan with $2.2 billion; and San Miguel Corp. President and Chief Operating Office Ramon S. Ang with $2 billion.

The impact of the pandemic on the restaurant industry affected the wealth of Tony Tan Caktiong, chairman and founder of homegrown fastfood giant Jollibee Foods Corp. (JFC). While he ranked ninth on the Forbes list, Mr. Tan Caktiong’s net worth was cut by 37% to $1.9 billion as the company’s stores were hurt by the lockdown and restrictions on dine-in services since March.

Rounding out the top 10 list were Puregold Price Club owners Lucio and Susan Co with a $1.7 billion fortune. 

Industry-related challenges also weighed on the wealth of some tycoons. The Ty siblings of GT Capital Holdings, Inc. and Metropolitan Bank & Trust Co. saw a 46% wealth drop to $1.4 billion. The fortune of Security Bank Corp. Chairman Emeritus Frederick Y. Dy also fell more than 46% to $190 million.

Oscar M. Lopez, who owns a majority stake in ABS-CBN Corp., saw his net worth halved to $240 million after the media giant was denied a franchise by lawmakers in July.

Only 10 of the 50 tycoons on the Forbes list saw an increase in their wealth this year. Edgar “Injap” Sia II, whose net worth rose $300 million to $700 million, ranked 21st. The 43-year-old, who founded fastfood chain Mang Inasal and leads DoubleDragon Properties Corp. and MerryMart Consumer Corp. was the youngest tycoon on the list.

Six people fell off the list, including Edgar B. Saavedra, chairman and CEO of engineering firm Megawide Construction Corp. 

Four names were brought back to this year’s list because of Forbes’ 23% lower cutoff of $100 million: lawmaker and businessman Michael L. Romero ($135 million), Nickel Asia Corp.’s Luis J. L. Virata ($115 million), Aboitiz Group’s Mikel A. Aboitiz ($110 million) and Far Eastern University, Inc.’s Lourdes R. Montinola ($100 million).

Forbes based the tycoons’ net worth on stock prices and exchange rates as of market close on Aug. 28. — D.A.Valdez

Ayala aims to build country’s largest health clinic network

Ayala Healthcare Holdings, Inc. (AC Health) is fortifying its Healthway brand by converting its clinic network to carry one name and be the largest clinic network in the country.

In a statement on Thursday, AC Health said it wants to strengthen the position of Healthway as its integrated clinic arm offering primary to multi-specialty care services.

Its target is to have 70 Healthway family clinics, seven Healthway multi-specialty centers, and 45 Healthway corporate clinics within the year.

“The (above) 100 clinics are already existing, but the transition to the Healthway brand will be completed by the end of the year,” the company said in an email.

The types of formats will each cater to different healthcare services. The family clinics will focus on community-based primary care, the multi-specialty centers will be mall-based and offer specialty services and diagnostics, and the corporate clinics will attend to corporate clients.

The family clinics and corporate clinics are currently called FamilyDOC, and the multi-specialty centers are currently called Healthway Medical.

“We are excited to integrate our clinic network under the Healthway brand… With this expansion, we can truly be wherever our patients need us,” AC Health President and CEO Paolo Maximo F. Borromeo said in the statement.

AC Health bought Healthway’s Philippine portfolio from Hong Kong’s HKR International Ltd. late last year. The acquisition was intended to integrate the company’s services for the long term.

AC Health is the healthcare unit of Ayala Corp., which also has interests in real estate, banking, telecommunications, and utility, among others.

Ayala Corp. posted a 79% net income drop to P7.9 billion in the first semester. Its shares at the stock exchange grew P17 or 2.44% to P715 each on Thursday.

DITO cites deal with US firms amid concerns over China ties

DITO Telecommunity Corp. is investing P1 billion in cybersecurity solutions this year to be supplied by 12 technology firms based in the United States, a company official said on Thursday after various groups questioned its ties with a Chinese telecommunications company.

“All come from: Fortinet, NexusGuard, McAfee, Nessus, Veritas, Pentaho Data, IDAM Systems by BeyondTrust, Microsoft, Cisco ISE, Siemplify, ManageEngine, and SolarWinds,” DITO Chief Technology Officer Rodolfo D. Santiago said in an online briefing.

The third telco player made the announcement after some sectors, including lawmakers, raised concerns about its partnership with China Telecom (ChinaTel) and its planned construction of cell sites inside military camps.

Adel A. Tamano, DITO’s chief administrative officer, said the company had so far spent P150 billion this year. He said it expects to spend P27 billion for the next phase of its network rollout next year.

“As of Sept. 13, 2020, DITO now has a total of 859 out of the 1,300 estimated number of towers needed to achieve mandated targets of 37% population coverage and speed of 27mbps by January of 2021,” Mr. Santiago said.

Mr. Tamano assured the public that DITO is ready to commercially launch its services in March next year after the scheduled technical audit in January.

He also reiterated that DITO is 60.8% owned by Filipinos, particularly by Dennis A. Uy’s Udenna Corp. and Chelsea Logistics and Infrastructure Holdings Corp.

On Sept. 9, DITO said it would not use its devices and infrastructures to obtain classified information from the Armed Forces of the Philippines (AFP).

“The memorandum of agreement, signed with the AFP, contained the very same provisions signed by the other two telcos with the notable exception that additional provisions were provided pertaining to commitments of DITO to national security. DITO Telecommunity guaranteed that its devices, equipment, and structures shall not be used to obtain classified information from the Armed Forces,” Mr. Tamano said.

He said the company submitted its cybersecurity plan during the bidding process “to prove that our networks and facilities will not compromise national security and shall abide with the National Cybersecurity Plan.”

Mr. Tamano added that the Department of Information and Communication Technology and the national security adviser “accepted” the plan.

DFNN affiliate eyes Australia-listed casino group

An affiliate of gaming and technology firm DFNN, Inc. has signed a deal to buy a majority stake in a casino operator listed in the Australian Stock Exchange.

In a disclosure on Thursday, DFNN said its affiliate HatchAsia, Inc. has executed a deed of company arrangement to acquire 92% of the issued share capital of Silver Heritage Group Ltd.

Silver Heritage is the Australia-listed casino operator that has two casinos in Nepal.

The deal with Silver Heritage was done through HatchAsia’s wholly owned Australian subsidiary Hatch Australia Holdings Pty Ltd. DFNN owns an 18.98% stake in HatchAsia.

“Hatch Australia has signed and executed the deed of company arrangement to take control of Silver Heritage Group Limited, a company listed in the Australian Stock Exchange,” DFNN said in Thursday’s disclosure.

The consideration for the transaction is AUD530,000 (about P18.74 million) in cash and 3% of the issued shares in Silver Heritage.

“[T]he (deed) will be effected via the acquisition of (approximately 92% of Silver Heritage’s issued share capital) through a consolidation of shares of existing shareholders and a new issue of ordinary shares for (Hatch Australia),” it added.

In its earlier disclosure, DFNN said the acquisition will give it access to a wider capital base and introduce it to new international markets.

The company swung to an P83.49-million attributable net loss in the first six months of the year, weighed by the closure of gaming operations due to the coronavirus pandemic. Its revenues dropped 48% to P333.2 million.

DFNN shares shed five centavos or 1.56% to P3.15 each on Thursday. — Denise A. Valdez

Imported car sales drop 49%, break month-on-month gains

Imported vehicle sales declined 48.7% in the eight months to August this year and broke a month-on-month uptick due to the two-week stricter lockdown last month.

In a report released on Thursday, the Association of Vehicle Importers and Distributors, Inc. (AVID) said the industry’s 21 member companies and 26 global brands sold 29,360 units during the eight-month stretch, down from 57,202 in the same period last year.

Imported vehicle sales lost a month-on-month rising trend, falling seven percent to 5,100 vehicles in August compared with the earlier month.

Metro Manila and nearby provinces were once again placed under a modified enhanced community quarantine for the first two weeks of August in an attempt to curb the rise in the cases of coronavirus disease 2019 (COVID-19). 

The imported vehicle industry, however, expects to sustain its recovery in the last four months of the year.

“There are encouraging indicators of a sustained recovery for auto with the gradual reopening of businesses. Still, we remain vigilant since a key aspect of the industry’s revival is the restoration of consumer confidence through strict health and safety guidelines and rapid digital transformation,” AVID President Ma. Fe Perez-Agudo said.

She said that the industry needs government support for its recovery. Similar to the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI), Ms. Perez-Agudo expressed concern about the government’s investigation on possible safeguard duties on imported vehicles.

The Trade department is conducting the safeguard investigation after the Philippine Metalworkers Association flagged a possible link between a surge in automotive imports and a decline in local employment.

“Prior to the lockdowns, we have conveyed our position that penalizing imports will not trigger investments nor address pressing issues faced by the local manufacturing sector. Rather, it is a disruptive measure, which will further inhibit the growth of the automotive industry and reduce our competitiveness in the region,” she said.

Passenger car sales, as of August, fell by 51% to 9,755 units, compared with 20,073 in the same period last year, with Hyundai Asia Resources, Inc. accounting for the bulk of the sales with 5,117 units.

Light commercial vehicle sales declined 46.8% to 19,412 units, led by Ford Group Philippines, Inc. which sold 5,082 units.

Commercial vehicle sales plummeted by 70% to the 193 units sold by Hyundai Asia Resources, Inc. — Jenina P. Ibañez

SM Investments gets corporate regulator’s nod on P30-billion bond program

SM Investments Corp. (SMIC) has received the approval of the Securities and Exchange Commission (SEC) for the shelf registration of a P30-billion bond program.

In a disclosure to the exchange on Thursday, the conglomerate said it has recently received a pre-effective clearance letter from the SEC for its proposed debt securities program.

The SEC also issued a statement, saying SMIC’s registration was approved by the commission en banc in a Sept. 15 meeting.

The company plans to initially offer up to P10 billion fixed-rate bonds, from which P5 billion is an oversubscription option. The offer is estimated to generate P9.89 billion in net proceeds, which SMIC will use to refinance existing loans.

This first tranche will comprise 3.5-year bonds due in 2024, which will be issued in minimum denominations of P20,000, and in multiples of P10,000 thereafter. They will be listed on Philippine Dealing & Exchange Corp.

SMIC has tapped BDO Capital & Investment Corp., China Bank Capital, BPI Capital Corp., First Metro Investment Corp., and SB Capital as joint lead underwriters for the initial tranche. 

The remaining securities from the P30-billion bond program may be issued in tranches within a three-year period.

“Further details on the bonds will promptly be disclosed to the public as it becomes available,” SMIC said.

The company posted a 69% earnings drop to P7.09 billion in the first semester. Its revenues fell 21% to P185.53 billion, as the coronavirus pandemic weighed on its malls and banking businesses.

Shares in SMIC at the stock exchange slid P5 or 0.55% to P905 each on Thursday. — Denise A. Valdez

Pepsi starts tender offer to delist from PSE

PEPSI-COLA Products Philippines, Inc. (Pepsi-Cola Philippines) has started the tender offer of some 77.86 million common shares by Lotte Chilsung Beverage Co. Ltd.

In a Sept. 15 letter to the Philippine Stock Exchange, Inc. (PSE), Pepsi-Cola Philippines has formalized its application to delist its shares from the local exchange. The company first announced the decision on Sept. 10.

Lotte Chilsung, which bought 1.13 billion shares in the company earlier this year, is doing the tender offer of shares from Sept. 16 to Oct. 13. The shares are priced at P1.95 each.

To recall, Lotte Chilsung bought 1.13 billion shares or a 30.7% stake in Pepsi-Cola Philippines in June. The P2.21-billion transaction resulted in the deflating of the company’s public float to 2.1%.

The PSE’s minimum public ownership for listed firms is 10%. Breaking this threshold is a ground for delisting.

“In relation to the voluntary delisting and pursuant to the rules of the PSE on voluntary delisting, Lotte Chilsung is undertaking a mandatory tender offer to acquire the 77,858,236 (Pepsi-Cola Philippines) common shares held collectively by all common shareholders of the company,” it said.

The shares to be bought by Lotte Chilsung exclude those currently held by Lotte Corp. and Quaker Global Investments B.V.

In a Sept. 10 disclosure to the exchange, Pepsi-Cola Philippines said its board of directors decided to delist as it will not be able to comply with the minimum public ownership requirement given the “prevailing market conditions.”

Despite its delisting, Pepsi-Cola Philippines will remain the exclusive Philippine bottler of PepsiCo’s beverage brands Pepsi, Mountain Dew, 7-Up, Mirinda, Mug, Gatorade, Tropicana, Sting, and Aquafina.

Shares in Pepsi-Cola Philippines stopped trading on June 17. It closed at P1.70 apiece at the time.

The company posted a P162.39-million attributable net loss in 2019, a turnaround of its P71.1-million attributable net income the year prior, as its revenues dropped 7% to P7.7 billion. — Denise A. Valdez

Sumitomo to build wiring harness factory in Pangasinan

SUMITOMO Wiring Systems, Ltd. has broken ground for a new wiring factory in Binalonan, Pangasinan that is expected to create around 10,000 jobs.

A subsidiary of Japan-based Sumitomo Electric Industries, Ltd., the company’s factory for wiring harnesses will be in Northluzon Aero Industrial Park (NAIP). Wiring harnesses are used in automotive manufacturing.

The Department of Trade and Industry (DTI) said that the project is part of 26 business agreements signed by Trade Secretary Ramon M. Lopez during President Rodrigo R. Duterte’s visit to Japan in May 2019. The combined business projects are valued at
P289 billion and can produce 82,000 jobs, DTI said in a press release on Thursday.

Sumitomo Electric President and Chief Operating Officer Osamu Inoue at the time signed a letter of intent to build a new factory for wiring harnesses in Northern Luzon, from which products will be exported to Japan and North America.

The Pangasinan project is expected to create an estimated 10,000 jobs, DTI said.

“Not only will the Sumitomo factory generate more jobs and employment for communities in the area, it will boost the development of our wiring industry to become part of the global value chain,” Mr. Lopez said.

DTI Senior Trade Representative Dita Angara-Mathay said that an additional investor from Japan joins the eight foreign investors in wiring harness manufacturing in the country.

“We are working towards cementing the Philippines’ role as a competitive hub for wiring harness production in the region,” she said.

The Philippines has a 6.5% share in the $80-billion global wiring harness market, DTI said.

IHS Markit in April forecast global auto sales to fall 22% to 70.3 million units this year compared with the figure in 2019. — Jenina P. Ibañez

Del Monte sees return to profitability in 2021

CANNED FRUITS manufacturer Del Monte Pacific Ltd. is expecting to swing back to profitability in 2021 as it continues the optimization of production facilities.

In a presentation to stockholders uploaded to the exchange on Thursday, Del Monte said it is expanding its product portfolio to push back its bottomline to record an income for the next fiscal year.

“The (Del Monte) Group is expected to return to profitability in fiscal year 2021, barring unforeseen circumstances,” it said.

“Aside from the (Del Monte) base business, (US subsidiary Del Monte Foods, Inc.) is also well-positioned to improve performance in fiscal year 2021 with better sales mix and management of costs,” it added.

The company swung to an attributable net loss of $81.39 million in its fiscal year ending April 2020, which it said was due to one-off expenses from the closure of its US facilities and the retirement of loans.

Excluding the one-off items, the company saw a recurring net profit of $32.2 million, more than double the $15.8 million it saw in the previous fiscal year.

Del Monte said it is performing well despite the coronavirus disease 2019 (COVID-19) pandemic, as many people have started to cook their own food at home.

“We are benefiting from the COVID-19 environment as consumers turn to trusted brands, shelf-stable and culinary products for home cooking,” it said.

However, the company warned it may still incur a net loss in the first quarter due to the seasonal nature of its business. But for the remaining quarters, it expects to post an income.

“Our strategy is to strengthen the core business, expand the product portfolio, in line with market trends for health and wellness, and grow our branded business while reducing non-strategic business segments,” it said.

Shares in Del Monte at the stock exchange closed at P4.80 apiece on Thursday, up five centavos or 1.05% from the previous day. — Denise A. Valdez

AgriNurture board approves reclassification of shares

LISTED agricultural firm AgriNurture, Inc. (ANI) has made adjustments to its articles of incorporation in relation to its authorized capital stock that will provide more trading opportunities for shareholders and investors.

The company’s board of directors approved the reclassification of 40 million unissued common shares at a par value of P1 per share to 400 million voting preferred shares with a par value of P0.10 per share.

“The shares to be reclassified shall come from the unissued portion of the total authorized capital stock of the company,” the company said in a stock exchange disclosure on Thursday.

Aside from creating additional trading options for shareholders, ANI said the lower value of preferred shares will offer more affordable shares for small investors.

“The shares will be more marketable and liquid in the market,” it said.

ANI will start the documentation process for the approval of the Securities and Exchange Commission (SEC) for the changes to take effect within the last quarter of the year.

Once approved by the SEC, the authorized capital stock of ANI, at P2 billion, will be split into 1.96 billion common shares and 400 million preferred shares.

On Thursday, shares in ANI at the stock market fell 0.25% or P0.02 to close at P7.96 each. — Revin Mikhael D. Ochave

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