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Lopez holding firm reports 26% profit decline during pandemic

First Philippine Holdings Corp. (FPH) saw its net profit in the first semester fell by 26% to P3.5 billion as the pandemic pulled down its income from operations.

In a regulatory filing, the Lopez-led holding company saw its topline falter by 21% to P53.9 billion on reduced power and real estate sales.

The company incurred one-off losses due to coronavirus pandemic-related expenses, which reached P235 million. Excluding these, its recurring net income in the period stood at P10.2 billion, lower by 21% from over a year ago.

FPH’s electricity sales declined by 18% to P10.4 billion on lower revenues from First Gen Corp.’s natural gas plants, hydro platform, and geothermal unit.

The power company in a separate disclosure said its recurring attributable profit dwindled by 15% to P6.7 billion in the first half of the year as the decline in power demand worsened in the second quarter when the economy entered into recession.

Its total revenues from power sales fell by 15% to P47.7 billion in the January-June period. First Gen’s natural gas plants delivered P4.5 billion to the holding firm’s recurring revenues, down 16% as it continues to suffer from low electricity sales in the second quarter. Making up 61% of their parent’s revenues, the gas plants posted a 17% drop in earnings due to lower average natural gas prices and a decline in their dispatch.

Energy Development Corp. posted a slightly lower earnings’ share of P2.4 billion because of a slump in revenues from lower electricity prices. It netted P2.4 billion in revenues, forming 36% of First Gen’s topline.

Its hydro platform, First Gen Hydro Power Corp., brought in P200 million, a 68% share decline, due to lower prices at the Wholesale Electricity Spot Market (WESM). Its revenues, which account for 2% of its parent’s earnings, plunged by 47% to P900 million on poor spot market sales.

Meanwhile, FPH’s real estate sales dropped by over half, or 52%, to P2.2 billion because of the combined reduced sales take-up and slow construction completion of Rockwell Land Corp. following quarantine restrictions.

It also earned 23% less from contracts and services, which stood at P3.2 billion, because of the slowdown in construction activities and drilling services of First Balfour, Inc. and ThermaPrime Drilling Corp., as well as the reduced lease revenues of Rockwell’s commercial spaces due to rent concessions.

Merchandise sale earnings dropped by 26% to P805 million as First Philippine Electric Corp. sold fewer electrical transformers after its plant went on a shutdown.

On Friday, shares in FPH inched up 0.25% to close at P59.15 each, while First Gen’s shares declined by 3.83% to close at P22.60 apiece. — Adam J. Ang

Max’s Group losses widen as store sales plunge

Casual dining restaurant group Max’s Group, Inc. further bled as it incurred another loss in the second quarter to shed P602.9 million in the first six months of the year.

In a disclosure to the stock exchange on Friday, the listed restaurant operator said its second- quarter systemwide sales from both company-owned and franchised stories plunged by 68.9% to P1.6 billion. Same-store sales also fell by 55.8%.

Its revenues declined by 71.1% to P1.1 billion between April and June as its local stores were trading via delivery and take-away channels. Its mall sites, comprising almost half of the group’s domestic network, were shut from mid-March to May due to quarantine restrictions.

“The poor performance for the second quarter of the year was, as expected, a result of the historic challenges the industry faces during this global pandemic. We have taken this opportunity to leverage our core sources of strength to underpin a strategic transformation geared towards our eventual recovery,” Max’s President and Chief Executive Officer Robert F. Trota said.

In the first half, Max’s systemwide sales fell by 42.5% to P5.6 billion, with same-store sales declining by 26.5%. Its revenues in the same period also faltered by 46.2% to P3.8 billion.

Despite a volatile business landscape, the company remained committed to renew its business. It is presently diversifying its consumer services and platforms to adapt to changing consumer behavior, Mr. Trota said.

Max’s brands Yellow Cab and Krispy Kreme showed resilience and market relevance during the quarantine phase due to “intrinsic demand” in delivery and take-away channels.

A “progressive” sales recovery of Max’s Restaurant and Pancake House brands was seen after lockdowns were eased to allow dine-in in physical restaurants.

The pandemic’s impact “demanded that we rethink how we can do more with less, and rebuild our foundation for sustainable growth,” said Max’s Chief Operating Officer Ariel P. Fermin.

The restaurant group has “rapidly identified and scaled green shoots,” such as ready-to-cook meal formats, alternative on-the-go services, work-from-home meals, and multi-brand cloud kitchens to widen its reach while addressing consumers’ safety concerns.

Moreover, it has recalibrated its operations through technology transfer across commissaries to avoid redundancies in suppliers, toll manufacturers, and hubs. The company also combined logistics to cut transportation costs and lift service levels via dynamic routing and co-loading.

“At store level, we aim to improve margins through a combination of optimal pricing, rationalized menus, and shared materials across brands and products to leverage on volume,” Mr. Fermin added.

Max’s will “control” its store network expansion and accelerate the closure of unprofitable stores for the rest of the year, minding its adherence to scheduled pipeline, Mr. Trota said. “We believe we have the right strategic fundamentals in place for a robust return to profitability,” he added.

The company is running its store network in 745 locations, with 686 in the Philippines and 59 located in various sites in North America the Middle East, and Asia. About 85% or 630 stores were operational as of end-June.

On Friday, shares in Max’s inched down 0.14% to close at P4.88 each. — Adam J. Ang

Lockdowns bring down Alliance Global’s first-half profit

Alliance Global Group, Inc.’s (AGI) net income in the first semester plunged by 67% to P4.1 billion as quarantine restrictions limited the operations of its businesses

The Andrew Tan-led firm in a stock exchange disclosure, Friday, said its total revenues between January and June fell by over a quarter to P61.4 billion.

“The country’s strict two-month lockdown weighed heavily on most of our domestic operations,” AGI Chief Executive Officer Kevin L.Tan said. The government placed the country under enhanced community quarantine in mid-March and April.

By segment, its property arm Megaworld Corp. posted a lower income share of P5.4 billion, down 33%. Its total revenues in the first half fell by a quarter to P23.8 billion as the harsh lockdown pulled down its earnings from mall rents, real estate sales and hotel revenues.

Spirits producer Emperador, Inc. delivered a slightly improved profit contribution of P3.3 billion to its parent. The whiskey manufacturer saw flat earnings, which stood at P21.5 billion, as a liquor ban affected its local sales.

Travellers International Hotel Group, Inc., the operator of Resorts World Manila, incurred a P3.7-billion net loss in the period, especially when the quarantine put a temporary halt to its casino gaming operations. Its gross revenues took a 53% dive to P7.8 billion.

Golden Arches Development Corp., also known as McDonald’s Philippines, shed P709 million in the period with total revenues down by 37% to P9.7 billion. From only 38% of the fast-food giant’s stores operating at the start of the lockdown, 84% are trading by May, though, at limited capacity.

Diverse income streams lessened the pandemic’s impact on AGI’s group performance, the company said.

“We take comfort from the fact that we have managed to diversify our sources of income, either by type of products or by geographic contribution, and this has helped us mitigate the impact of this pandemic on our group performance,” Mr. Tan said.

AGI’s digital transformation aided its businesses during the strict community quarantine, according to Mr. Tan. He said that the company has to modify its product offerings and to acquire new skills to adapt to changes in consumer behavior.

On Friday, shares in AGI fell by 2.81% to close at P5.87 each. — Adam J. Ang

New SEC rules simplify onboarding of low-risk accounts

Securities and Exchange Commission (SEC) Chairman Emilio B. Aquino has issued a memorandum circular that seeks to simplify the onboarding of accounts to financial intermediaries if they have a deposit of not more than P50,000.

“For purposes of this circular, an account opened and maintained by an individual investor with an initial and subsequent deposit, investment or re-investment amounting to an aggregate of not more than P50,000 shall be deemed to be a ‘low-risk account’,” the Aug. 11 SEC Memorandum Circular No. 21 said.

The commission said the simplified onboarding procedures for low-risk customers of financial intermediaries are necessary in order to achieve “financial inclusion.”

The new rules cover regulated entities authorized by SEC to intermediate and effect securities transactions for and on behalf of customers and are required to conduct customer due diligence.

The memorandum circular allows a low-risk investor to invest in excess of the prescribed limit “only for the purpose of exercising his right as a holder of securities.”

SEC said it may allow regulated financial intermediaries to require a different threshold amount in determining an account as being low risk.

The commission said only Filipinos are allowed to open low-risk accounts.

The opening of accounts should follow the regular requisites and procedures required by the concerned regulated financial intermediaries in accordance with the relevant rules and regulations, including their internal procedures.

The minimum information needed for low-risk accounts are complete name of customer, birthdate, e-mail address, residential or business address, mobile and/or landline number, and source of income.

A copy of a verifiable identification card or document and a signature card are also required. The SEC said regulated financial intermediaries “may prescribe other criteria and measures for account opening in addition to the minimum information required.”

Regulated financial intermediaries will have to take the necessary steps to establish the true identity and existence of a customer not later than 15 days from the date the account is opened.

As for the conversion of an account from low risk to normal or high risk, regulated financial intermediaries are required to adopt the necessary policies and processes. — Arjay L. Balinbin

Vehicle sales down 35% in July

Vehicles sold in July reached 20,542, down 35.4% from from 31,810 units sold in the same month last year, a joint statement by Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) said on Friday.

Compared with the earlier month, the groups saw an improvement of 31.9% from June’s 15,578 units sold.

“Year-to-date, the industry has sold 105,583 units, a 48.7% decline compared with the same period a year ago,” they noted.

Still, CAMPI is hopeful that sales will continue to improve until December to achieve its 2020 sales target of 240,000 units.

“It is understandable that achieving the industry’s average monthly pre-COVID-19 level remains elusive and a challenge at the same time amid this pandemic and the recent pronouncement of economic recession. But this month-on-month of nearly 32% growth is what the industry needs at this point to achieve its sales forecast,” CAMPI President Rommel R. Gutierrez was quoted as saying in the statement.

CAMPI and TMA noted the sales target for the year is equivalent to “41.5% decrease compared with the total industry sales volume recorded a year ago.”

Mr. Gutierrez said the reduction can have a “serious operational and financial impact” on the industry.

He said both groups had submitted their proposals for support to the Trade department. Car dealerships were shut from mid-March due to the Luzon-wide lockdown. Some dealerships started reopening in mid-May after lockdown restrictions were relaxed.

“The industry is doing all it can to sustainably provide sales promotions to encourage customers amid another stricter community quarantine for this month,” Mr. Gutierrez said.

“On our part, the industry is ensuring that all the necessary safety measures are strictly observed to protect both our customers and our front liners,” he added. — Arjay L. Balinbin

Alsons profit surges as power plants continue to run

The second-quarter income of Alsons Consolidated Resources, Inc. (ACR) soared to P1.08 billion, increasing by almost nine times from P188.72 million in the same period last year, as its power plants continuously ran amid lockdowns in Mindanao.

This increase boosted the Alcantara-led power firm’s total net profit in the first six months of the year to P1.39 billion from P293.08 million previously.

Its topline in the April-June period rose to P3.07 billion, lifting its first-half revenues to P5.28 billion. The company attributed the growth to its 210-megawatt (MW) Sarangani Energy Corp.

(SEC) coal-fired baseload plant, which started running at full capacity upon the entry of its second unit in October.

“We expect higher revenues and profit margins from the full commercial operations of the Sarangani Energy plant,” ACR Deputy Chief Financial Officer Philip Edward B. Sagun said in a stock exchange disclosure on Friday.

“We will also reap the benefits of lower operating costs as we continue to maintain cost efficiency measures,” he added.

With such growth, Alsons remain “cautiously optimistic” on its financial performance for the rest of the year.

On Friday, shares in ACR expanded by 3.25% to close at P1.27 each. — Adam J. Ang

D.M. Wenceslao income down 56% as revenues dip

PROPERTY and construction firm D.M. Wenceslao and Associates, Inc. (DMW) posted a 55.9% decline in its net income attributable to equity holders of the parent company to P271.12 million in the second quarter of the year due to lower revenues.

In a disclosure to the stock exchange Friday, DMW said its revenues for the quarter fell 21.1% to P525.94 million, against P666.62 million in the same period last year.

For the first half of the year, the company’s net income fell 36.2% to P716.50 million, from P1.12 billion in 2019 due to the P600 million one-off gain recognized in 2019 as part of other income.

DMW’s revenues for the first six months rose 23% to P1.55 billion with 64% or P990.22 million coming from recurring income such as rentals from land, building, and other revenues including fees for common-use service area.

“The company’s operating profit increased by 25% for the same period brought about by the ramp-up in revenues from sale of condominium units and stable recurring income contribution,” the disclosure said.

DMW Chief Executive Officer Buds C. Wenceslao said that despite the effects of the coronavirus disease 2019 (COVID-19),the company’s performance for the second quarter was a record period for the residential business due to the turnover of a recently finished project Pixel Residences.

“While this pandemic has caused severe uncertainty and lack of consumer confidence in the market, the value enhancement strategies we execute on our Aseana City landbank remains steadfast,” Mr. Wenceslao said.

“As we have witnessed just recently, living in mixed use master-planned communities will continue to have an advantage in terms of amenities, infrastructure and services,” he added.

Meanwhile, Mr. Wenceslao said that as of June 30, the company had released 39% or P2.98 billion of the net proceeds from its initial public offering for pipeline project development.

On Friday, DMW shares fell 0.83% or P0.05 to close at P6 apiece. — Revin Mikhael D. Ochave

Global Ferronickel income up 47% on higher ore prices

GLOBAL FERRONICKEL Holdings Inc. (FNI) posted a 46.6% higher net income attributable to equity holders to P354.24 million in the second quarter, due to higher nickel ore prices and lower operating expenses.

In a disclosure to the stock exchange Friday, the miner and nickel ore exporter said its revenues for the quarter fell 11.7% to P1.51 billion after company operations were temporarily suspended in April due to the coronavirus disease 2019 (COVID-19) pandemic.

For a six-month period, the company posted 85.6% higher net income to P196.69 million against P105.99 million in the same period last year, while revenues fell 12.9% to P1.55 billion. Meanwhile, FNI’s operating expenses during the second quarter fell 19.3% to P389.43 million.

For the first half, its operating expenses declined by 13.3% to P577.62 million.

“While the operating expenses decreased as a result of the temporary suspension of operations, the group incurred added costs in putting up health-related measures to safeguard the well-being of its employees and host and neighboring communities,” the disclosure said.

FNI said the average realized ore price for the first half rose to $24.38 per wet metric ton (WMT), compared with $18.82 per WMT last year. A total of 23 vessels carried 1.26 million WMT of ore, of which 52% were low-grade ore and 48% were medium-grade ore.

“This shipment is less than the previous year’s tally of 33 vessels with a total volume of 1.81 million WMT and a product mix of 39% low-grade ore and 61% medium-grade ore,” the disclosure said.

FNI President Dante R. Bravo said the company had regained its momentum and is expected to meet its adjusted shipment target of 5 million WMT for the year despite the pandemic.

“We continue to adhere strictly to all government-mandated health and safety guidelines and remain committed to assisting our community in this time of crisis,” Mr. Bravo said.

FNI said since the start of the pandemic, it has spent almost P20 million as assistance to households in the town of Claver in Surigao del Norte and nearby areas.

On Friday, shares in FNI rose 2.73% or P0.03 to close at P1.13 each. — Revin Mikhael D. Ochave

Del Monte to list P13-B bonds

Del Monte Pacific, Ltd. (DMPL) on Friday said its Philippine unit is working to offer as much as P12.5 billion worth of bonds.

The company told the stock exchange that Del Monte Philippines, Inc. (DMPI) has filed with the Securities and Exchange Commission (SEC) an application to register its maiden public bond issuance of up to P5 billion, which has an oversubscription option of up to P7.5 billion.

The proposed offer may have a three and/or five-year tenor series.

The Singaporean and Philippine dual-listed firm said it would disclose the bonds’ prices “in due course.”

“The proceeds of the offering will be used to refinance existing loans and fund other corporate purposes,” DMPL said.

The food conglomerate has tapped BDO Capital & Investment Corporation, China Bank Capital Corp., First Metro Investment Corp., and RCBC Capital Corp. as its joint lead underwriters, joint issue managers, and joint bookrunners.

It is advised by Exchange Equity Partners Group Corp. for the upcoming issuance. Shares in DMPL increased by 2.36% to close at P4.78 apiece on Friday. — Adam J. Ang

SSI Group to launch new virtual shop

Specialty retailer SSI Group, Inc. is setting up a new online marketplace where a range of products from luxury fashion brands to food items will be offered.

The e-commerce site, which will go online in September, adds to its 10 existing virtual trading platforms.

“This e-commerce site will be unique in that it will carry a wide variety of brands from luxury, to casual and fast fashion, home, personal care products and food on one premium marketplace,” SSI President Anthony T. Huang said in a stock exchange disclosure on Friday.

The retail group said its e-commerce business, touted as the most diverse among domestic specialty retailers, showed “significant” growth in the first six months of the year with sales soaring by 375%.

SSI shed P467 million in the first semester as sales from shuttered stores declined by almost a half during the lockdown months.

Since reopening some physical stores on June 1, it saw “steady” weekly sales growth. For instance, American fast-casual Shake Shack and SaladStop! chains, which reopened ahead of the other company brands, have received high demand from both delivery and take out customers.

“I am optimistic with respect to the steady increases we have seen in brick and mortar sales and that we are ready to compete and operate under the ‘new normal’,” Mr. Huang said.

SSI is developing flexibility in operations mainly through the expansion of its e-commerce presence, along with safe shopping, executing strategic sale and promotional events, and adding customer channels.

Shares in SSI inched up 0.95% to close at P1.06 each on Friday. — Adam J. Ang

Apex Mining earns P193M on higher gold prices

MINING COMPANY Apex Mining Co., Inc. posted a P192.60 million second-quarter net income attributable to the parent firm’s equity holders largely due to higher gold prices and better gold production.

In a disclosure to the stock exchange on Friday, the company said its revenues for the quarter fell 24.2% to P825.11 million compared with P1.09 billion in the same period last year.

For the first half, Apex Mining’s net income rose 297.1% to P312.13 million while the company’s revenues declined 14.5% to P2.01 billion.

Due to lockdown protocols caused by the coronavirus disease 2019 (COVID-19) pandemic, Apex Mining said its milling throughput for the first half went down 14.1% to 314,528 tons versus 366,076 tons in 2019.

Despite the lower output, the ore grade rose to 3.53 grams per ton gold and 22.15 grams per ton silver.

Further, the company’s gold mill recovery rate improved to 86.63% from 84.37% in 2019, while silver mill recovery rate fell to 74.25% from 75.08%.

“These resulted in slightly better gold production output of 30,988 ounces this period from 30,412 ounces in 2019, but slightly lower silver output of 171,602 ounces from 174,659 ounces,” the disclosure said.

The company said that 23,008 ounces of gold priced at $1,634 per ounce and 125,635 ounces of silver at $17 per ounce were sold during the first half of the year.

Apex Mining President and Chief Executive Officer Luis R. Sarmiento said that if gold prices remain strong for the rest of the year, coupled by continued initiatives for production efficiency, the company will be able to sustain its current performance.

“We are proud of our Maco mine team for doing very well despite the difficulties brought about by the pandemic,” Mr. Sarmiento said.

Meanwhile, Apex Mining’s wholly owned subsidiary Itogon-Suyoc Resources, Inc. (ISRI) formally started commercial operations of its Sangilo mine in Itogon, Benguet.

“The exploration and resource validation work in Suyoc, the other mine of ISRI, in Mankayan, Benguet, continues,” the disclosure said.

“Developments are being awaited over the Sampaguita gas field offshore northwest of Palawan covered by Service Contract 72 where Monte Oro Resources & Energy, Inc. (MORE), another wholly-owned subsidiary, holds a 30% participating interest,” it added.

On Friday, Apex Mining shares rose 4.55% or P0.07 to close at P1.61 each. — Revin Mikhael D. Ochave

July dollar reserves rise to record

By Luz Wendy T. Noble, Reporter

The country’s dollar reserves rose to a fresh record as of end-July, backed by higher gold buffers amid a recent increase in world prices, the Philippine central bank said on Friday.

Gross international reserves (GIR) rose by 15% from a year earlier to $98 billion as of last month, data from the Bangko Sentral ng Pilipinas (BSP) showed. It also rose by 4.8% from May.

A strong reserve buffer protects financial markets from volatility and assures investors and debt watchers that the country can pay its debt even after the economy entered into a recession last quarter.

“The month-on-month increase in the GIR level reflected inflows mainly from the revaluation gains from the BSP’s gold holdings, the National Government’s foreign currency deposits with the BSP as well as BSP’s income from investments abroad,” the central bank said in a statement.

Foreign currency withdrawals made by the National Government to pay its foreign debt offset the growth in the dollar buffers.

At end-July reserve level was already more than the central bank’s $90-billion projection for this year.

It was equivalent to 8.9 months worth of imports of goods and payment of services and primary income. It was about 7.5 times the short-term external debt of the country based on original maturity and 4.9 times based on residual maturity.

The gold reserve component jumped by 57% year on year to $12.595 billion after having steadied at $8.02 billion since June last year.

Gains from investments abroad, which made up the bulk of the reserves, rose by a tenth to $80.72 billion but slid by $171 million from end-June.

Foreign currency deposits rose 5% to $2.76 billion from July 2019 and by $101 million from a month ago.

The significant increase in the gold reserves came “largely due to revaluation as world gold prices sharply increased to new record highs recently,” said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.

He said the continued increase in the dollar reserves would continue to support the peso, which had strengthened to the P48 a dollar level.

The peso closed at P48.765 on Friday, appreciating by 7.5 centavos from Thursday and by 27.6 centavos from P49.041 on Aug. 7.

“Record high GIR could strengthen the country’s external position, which in turn, fundamentally supports the country’s favorable credit ratings seen recently,” Mr. Ricafort said.

The Philippines entered into a recession last quarter after the economy shrank by 16.5%.

Economic managers have said the country was unlikely to get a rating downgrade because it continues to have “strong macroeconomic fundamentals.”

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