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TUCP files wage petitions for three more regions

AFTER filing a petition earlier this week before the Central Visayas wage board for a P386 minimum wage increase, the Trade Union Congress of the Philippines (TUCP) has demanded more pay hikes in three different regions.

The TUCP said in a statement on Friday that it filed three different wage petitions before the Regional Tripartite Wages and Productivity Boards (RTWPBs) of Region 3 (Central Luzon), Region 4-A (CALABARZON covering Cavite, Laguna, Batangas, Rizal and Quezon), and Region 10 (Northern Mindanao), “emphasizing urgent attention to prevalence of nutrition deficiency among Filipino workers and their families due to severely diminished take home pay.”

A P768 across-the-board wage increase for private sector minimum wage earners was petitioned before the Central Luzon and CALABARZON wage boards, while P782 was demanded in the Northern Mindanao RTWPB.

Daily minimum wages in each of the regions are at P284-P400 for Central Luzon; P303-P400 for CALABARZON; and P331-365 for Northern Mindanao.

The labor group used the Pinggang Pinoy model as one of their basis for the wage hike petition. The Pinggang Pinoy model is a framework that provides the prescribed nutrition needed for Filipinos daily.

“Using DOST’s Pinggang Pinoy model and the March 2019 PSA (Philippine Statistics Authority) Media Service Market Price of Selected Commodities, Ateneo Policy Center calculates daily food requirement in the amount of P734.00 for a family of four or P61.17/meal/person. A family of five would then require a daily right food budget of P917.50,” the petitions said.

“If we continue to ignore the fact that workers and their families subsist on nutritionally deficient meals for a long period, we will all definitely have bigger problems if we have vast army of undernourished Filipino workers which is detrimental to the country that prided itself with skilled, dynamic and perceptive workers not to mention the cost of healthcare,” TUCP President Raymond C. Mendoza said in a statement.

Late last month, TUCP filed for a wage hike petition of P710 for Metro Manila private sector minimum wage earners on top of the P500-P537 daily salary.

The labor group said the petition was denied by the NCR RTWPB this week, but the Metro Manila wage board has yet to issue a statement on the matter.

Under the law, wage hike petitions can only be entertained after at least 12 months since an issuance of a region’s wage order unless there is a supervening condition observed by the wage board which is subject to approval of the National Wages and Productivity Commission.

Central Luzon issued their last wage order on Aug. 1, while Northern Mindanao’s wage order took effect last Nov. 1, both under the prescribed 12-month period before a wage board issues an increase.

Meanwhile, CALABARZON’s last wage order already had its anniversary last April 28. — G.M. Cortez

PHL, Mexico to wrap up bilateral negotiations

THE PHILIPPINES and Mexico are set to conclude negotiations for agreements on air services, disaster risk management, and the establishment of a Joint Economic Committee (JEC), according to the Department of Foreign Affairs (DFA).

The DFA also announced on Friday that the two countries have agreed to work on the “full implementation” of signed agreements on tourism and counter-narcotics efforts.

“The Philippines and Mexico successfully held their 2nd Bilateral Consultation Mechanism Meeting (BCM), the first to be held at the Secretariat of Foreign Affairs in Mexico City on 06 May 2019,” the DFA said in a statement.

The meeting was led by Foreign Affairs Undersecretary for Policy Enrique A. Manalo and Mexican Undersecretary of Foreign Affairs Julián Ventura, together with their respective delegations.

Leaders from both sides “agreed to work on the full implementation of signed agreements on combating illicit trafficking of narcotic drugs, and tourism, and committed to conclude negotiations on pending agreements on air services, integral disaster risk management, and the establishment of a Joint Economic Committee (JEC)” which aims to further the bilateral trade and investment.

They discussed “bilateral political, economic, and socio-cultural issues” and other “pressing regional and multilateral issues” as a means to deepen over six decades of diplomatic relations between the Philippines and Mexico.

The DFA said both countries engaged in “open and frank discussions,” identifying specific measures to be undertaken to boost bilateral trade and investments and increase socio-cultural exchanges by implementing cultural and sports cooperation programs.

They also determined specific steps to promote new areas of cooperation in “agriculture and exchange of best practices on consular matters and in the provision of assistance to nationals during the BCM.”

The leaders likewise exchanged views on regional developments in Asia and Latin America, including on the Association of South East Asian Nations, Asia-Pacific Economic Forum, and the Pacific Alliance, the DFA said.

The DFA said Manila will host the next BCM. The exact place and schedule will be “mutually agreed upon at a later date.” — A.L. Balinbin

Property, telco units push Ayala Q1 profit 5% higher

CATHY ROSE A. GARCIA

By Arra B. Francia, Senior Reporter

EARNINGS of Ayala Corp. (AC) increased by five percent in the first quarter of 2019, driven by the strong performance of its property, banking, and telco units, complemented by gains from the merger of its education arm with the Yuchengco group.

In a statement issued Friday, the listed conglomerate said net income attributable to the parent hit P8.03 billion from January to March, as equity earnings contribution of its business units rose seven percent to P9.9 billion.

Globe Telecom, Inc. increased its contribution to the parent by 44%, while Ayala Land, Inc. (ALI) and Bank of the Philippine Islands (BPI) grew their contributions by 15% and five percent, respectively.

“Our first-quarter results show the advantages of a diversified portfolio. The strong performance of Ayala Land, Globe, and BPI offset the challenges from Manila Water’s water supply issues and the market conditions facing AC Industrials,” AC President and Chief Operating Officer Fernando Zobel de Ayala said in a statement.

AC also recognized net accounting gains of P1 billion from AC Education’s merger with iPeople, Inc. It now has a 33.5% stake in the Yuchengco-led company.

Consolidated revenues meanwhile reached P74.34 billion, five percent higher year on year.

ALI expanded its net income by 12% to P7.3 billion for the quarter, on the back of a seven percent in revenues to P39.7 billion. The property developer reported a four percent uptick in revenues from property development to P26.1 billon. The continued strong demand from local and overseas Filipinos also drove sales reservations higher by eight percent to P34.1 billion.

From the commercial leasing side, revenues went up 19% to P9.2 billion after the opening of new malls, offices, hotels, and resorts. The company now has 1.9 million square meters (sq.m.) in total mall gross leasable area (GLA) and 1.1 million sq.m. in office GLA.

BPI’s net income was up eight percent to P6.72 billion, as revenues grew 23.5% to P22.78 billion boosted by the strong performance of its core banking business. Net interest income improved by 29% to P16.1 billion, supported by an 8.8% increase in average asset base.

Globe realized a 44% uptick in net income to P6.7 billion, primarily due to the strong subscriber usage in data-related services from mobile, corporate, and home broadband segments.

Consolidated service revenues of the telco operator added 13% to P36 billion, benefiting from its rollout of its modernized 4G/LTE network which provides customers with faster downloads and web browsing experiences.

Meanwhile, Manila Water’s bottomline was affected by the water shortage in its Manila concession, dropping 27% to P1.2 billion for the quarter. Its operating expenses surged 39% to P2.46 billion due to the penalty imposed by the Metropolitan Waterworks and Sewerage System worth P534 million for “its inability to meet its service obligations to provide 24/7 water supply to its consumers in accordance with the concession agreement.”

AC Energy’s net income also plunged to 99.6% to P2.5 million, against P593 million seen in the same period a year ago. The decline was due to higher interest expenses from its green bond issuance, a lower wind regime, and the scheduled outage of a thermal plant.

The industrial unit was likewise weighed down by general market conditions and recorded a net loss of P332 million.

“The ongoing global market slowdown, startup losses from its newly acquired businesses, and weaker sales of its automotive retail distribution segment pulled AC Industrials’ performance,” the company said.

Shares in AC added 0.11% or P1 to close at P890 each at the stock exchange on Friday.

SMC plans tender offer for Holcim PHL minority shareholders

DIVERSIFIED conglomerate San Miguel Corp. (SMC) will have to conduct a tender offer to minority shareholders of Holcim Philippines, Inc. (HPI) in relation to its $2.15-billion acquisition of the listed cement manufacturer.

SMC disclosed on Friday that it will acquire 5.531 million common shares in HPI, representing 85.73% of the company’s total outstanding and issued capital stock.

The acquisition will be made through First Stronghold Cement Industries, Inc., a wholly-owned unit of SMC’s subsidiary San Miguel Equity Investments, Inc.

“As a result of the Transaction, the Purchaser is required to conduct a tender offer of the shares of HPI held by its minority shareholders who hold 14.27% of the total issued and outstanding capital stock of HPI,” SMC said.

SMC said it plans to request for exemptive relief with the Securities and Exchange Commission (SEC) to allow the tender offer to be conducted after the final purchase price has been determined and paid.

The company said the purchase price was negotiated and determined based on the valuation of HPI’s business through a discounted cash flow method, “as well as other methodologies customary for transactions of this nature.”

The $2.15-billion purchase price is also inclusive of fees for transitional service arrangements.

In a separate statement, HPI’s parent LafargeHolcim said it expects to close the transaction by the fourth quarter of 2019 and is seen to improve its debt ratio by around 0.3 times.

The group’s sale of its Philippine assets follows its divestment from Indonesia, Malaysia, and Singapore, worth a total enterprise value of $4.9 billion.

“With the divestment of our activities in the Philippines, we are completing our exit from the increasingly hyper competitive arena in South East Asia. While this decision is based on our strategic portfolio review, we have reached very attractive valuations allowing us to achieve a new level of financial strength,” LafargeHolcim Chief Executive Officer Jan Jenisch said in a statement.

The transaction also require the approval of the Philippine Competition Commission (PCC), as it exceeded the transaction value of mergers and acquisitions that should be reported.

“The PCC has not yet received the notification by San Miguel Corp or Holcim / LaFarge Philippines for mandatory review. The parties have 30 days after signing of their definitive agreement to submit the notification,” PCC Chairman Arsenio M. Balisacan said in a text message on Friday.

“The transaction shall be treated as a separate review given our ongoing enforcement case in the cement industry.”

Shares in SMC dropped 2.81% or P5.50 to close at P190 each at the stock exchange on Friday, while shares in HPI jumped 6.10% or 88 centavos to close at P15.30 apiece. — Arra B. Francia with input from Janina C. Lim

Earnings of LT Group jump 22% in first 3 months

By Arra B. Francia, Senior Reporter

LT Group, Inc. (LTG) generated a 22% attributable profit increase in the three months ending March, following a double-digit profit growth in its banking, tobacco, liquor, and real estate businesses.

The holding firm of tycoon Lucio Tan, Sr said in a statement Friday that net income attributable to the parent stood at P4.42 billion as of end-March, higher than the P3.63 billion it posted in the same period a year ago.

The tobacco business accounted for 64% of LTG’s total earnings, followed by the banking segment through Philippine National Bank (PNB) which contributed 24%. Contributions from Tanduay Distillers, Inc. (TDI), Eton Properties Philippines, Inc., Asia Brewery, Inc. (ABI), and Victorias Milling Company, Inc. were at 5%, 3%, 2%, and 2%, respectively.

LTG’s equity in net earnings from its 49.6% stake in PMFTC, Inc. stood at P2.69 billion, 18% higher year on year. The company attributed this to improved volume mix and the price increases implemented last December.

The company however said that the passage of higher excise taxes on tobacco products may slow down volumes. It noted that the industry’s volume has declined by 33% to about 73 billion sticks in 2018 over the last six years.

For PNB, net income under the pooling method jumped 30% to P1.95 billion. The listed lender grew its assets by 21% to P1.03 trillion by end-March, against P854 billion from the same period a year ago.

TDI’s net income surged 73% to P234 million, on the back of a five percent increase in volume. Its bioethanol sales also improved during the period. The liquor manufacturer said its nationwide market share is now at 28.1%, against 26.1% in March last year.

Eton Properties also delivered a 54% jump in earnings to P149 million, as revenues increased by 11% thanks to higher leasing income and residential sales. The property unit’s recent projects include Eton Square Ortigas, a pocket retail development in Ortigas Avenue, San Juan City completed in 2018, that is now fully leased out.

The property developer also looks to complete the retail and office components of Eton WestEnd Square in Makati by the end of the year.

Meanwhile, ABI’s net income dropped by 45% to P82 million, despite a 13% increase in revenues to P3.86 billion.

“The lower income was largely due to higher PET (polyethylene terephthalate) packaging costs and as the Company spent more on advertising and promotions,” LT Group said.

Shares in LTG added 0.24% or four centavos to close at P16.92 each at the stock exchange on Friday.

Chelsea 1st quarter income rises 21%

EARNINGS of Chelsea Logistics and Infrastructure Holdings Corp. jumped by 21% in the first three months of the year, driven by robust revenues from its logistics business.

The Dennis A. Uy-led company said in a statement Friday its net income stood at P139 million in the first quarter, as revenues rose 33% to P1.6 billion.

The bulk or 90% of revenues came from the shipping segment which saw a 32% increase to P1.5 billion.

The logistics segment also contributed P118 million, more than double the P58 million it posted last year.

“We are thrilled with the remarkable partial results of our logistics expansion program in terms of top and bottomline, and this is just the beginning. We are continuously expanding and optimizing our logistics assets and seizing opportunities to extend our reach,” Chelsea President and Chief Executive Officer Chryss Alfonsus V. Damuy was quoted as saying.

The company said its shipping revenues were boosted by a 36% rise in passage revenues to P296 million, a 35% increase in tankers and tugs revenues to P663 million, and a 28% growth in freight revenues to P522 million.

Costs and services grew 33%, operating expenses increased 21% and other charges up 128% due to the new vessels acquired by the company, namely the M/V Stella del Mar, M/V Salve Regina and M/V Trans-Asia which were all operating in the January to March period. — Denise A. Valdez

JG Summit creates digital equity ventures unit

JG Summit Holdings, Inc. is diving further into the digital space, pouring $50 million into a unit that will invest in digital ventures and emerging technologies in Southeast Asia.

The Gokongwei-led conglomerate said in a statement Friday that it established JG Digital Equity Ventures (JG DEV), which will deploy capital to early stage startups and successful portfolio companies raising funding at later stages.

The listed firm said JG DEV’s investments will be within the new media, consumer sector, retail and financial services verticals. It will also look at technology platforms that could power future industries such as digital health, data, and logistics.

The aim is to invest in startups that can either augment or disrupt JG Summit’s core businesses, which cover air transport, real estate, banking, telco, power generation, agro-industrial and commodities, and petrochemicals.

“Digital is a key pillar to JG Summit’s future. There is no shortage of ideas in the digital space, so we must focus on a few big bets that generate the most value,” JG Summit President and Chief Executive Officer Lance Y. Gokongwei said in a statement.

JG Summit has already invested at least $40 million in technology startups in the past. This includes SEA Limited, the firm behind online marketplace Shopee, as well as digital lender Oriente which operates in Indonesia, Vietnam, and the Philippines.

“JG is known to have very strong offline businesses. Our group is behind the pack in this digital journey, so our challenge is to leapfrog from where we are,” JG DEV Chief Executive Officer Bach Johann M. Sebastian was quoted as saying.

So far, JG DEV’s portfolio already includes Cashalo, a mobile app that allows users online and offline financing using their smartphones; Growsari, a retail startup that gives sari-sari stores direct access to suppliers; and Snapcart, which provides analytics services to brands by processing offline date like grocery receipts.

JG DEV will also be tasked to build digital businesses in-house and enter into joint ventures that will help its parent firm’s other subsidiaries, such as Cebu Pacific, Robinsons Retail Holdings, Inc., Universal Robina Corp., and Robinsons Land Corp.

“Given the unique combination of the JG’s extensive ecosystem, massive customer base and its forward-thinking leadership, I’m confident that JG DEV will emerge as a digital leader in Asia,” JG DEV Chief Operating Officer Ian Estrada said in a statement.

Shares in JG Summit firmed up 1.32% or 80 centavos to close at P61.50 each at the stock exchange on Friday. — Arra B. Francia

Swiss challenge for CTBEx seen before end-2019

THE Metro Pacific Tollways Corp. (MPTC) said it is expecting to conduct the Swiss challenge for the Cavite-Tagaytay-Batangas Expressway (CTBEx) project before the year ends.

“We’re hoping by at least third or fourth quarter it will be undergoing Swiss challenge already. It’s already May, and hopefully by second quarter it will be cleared for Swiss challenge so we can do the Swiss challenge by the third quarter, at the latest fourth quarter,” MPTC President Rodrigo E. Franco told reporters last Tuesday.

The CTBEx proposal of MPTC’s MPCALA Holdings, Inc. is currently being evaluated by the National Economic and Development Authority (NEDA). It was given original proponent status by the Department of Public Works and Highways (DPWH) in July 2018.

MPCALA Holdings proposed to build a P22.43-billion, 50.42-kilometer toll road that would connect the Cavite-Laguna Expressway at the Silang East Interchange to Tagaytay City and Nasugbu, Batangas.

It is expected to reduce travel time from Governor’s Drive to Nasugbu by 58 minutes, and from Sta. Rosa to Tagaytay by 1 hour and 15 minutes.

Under the Swiss challenge, third parties are invited to submit competing offers, while the original proponent will be given the right to match them.

If MPCALA Holdings prevails during the Swiss challenge, it will be awarded the concession for the CTBEx project.

MPCALA Holdings is under MPTC, the tollways unit of Metro Pacific Investments Corp. (MPIC). MPIC is one of three key Philippine units of Hong Kong based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Denise A. Valdez

Cosco Q1 profit hits P8.53B thanks to sale of Liquigaz

COSCO Capital, Inc. reported its net income attributable to equity holders of the parent company surged by 605% to P8.53 billion in the first quarter, thanks to the gain from the sale of Liquigaz Philippines Corp.

In a statement issued Friday, the retail holding firm of tycoon Lucio L. Co said core net income attributable to the parent increased by 9% to P1.32 billion, riding on the back of the country’s economic growth and higher consumer spending.

Cosco completed its divestment from Liquigaz last January, selling its entire stake in the liquefied petroleum gas firm to Fernwood Holdings, Inc. The company did not disclose the value of the transaction, but noted that it is less than 12% of total assets as of December 2017 or P111.61 billion.

The listed firm’s grocery retailing business through Puregold Price Club, Inc. and S&R Membership Shopping Club, delivered consolidated revenues of P34.8 billion, 12.8% higher year on year. Consolidated net income accordingly grew 11.9% to P1.5 billion.

Same-store sales growth stood at 6.9% for Puregold stores, while S&R’s ended at 9.4%.

“Our SSSG in the first quarter of 2019 is driven by higher consumer spending fueled both by minimum wage inflation in 2018 and easing inflation in 2019,” Puregold said in a separate statement.

The company opened a total of eight new Puregold stores and one S&R Warehouse Club during the period, bringing its total store count to 417 by end-March. Its total net selling area is now at about 550,000 square meters.

Cosco’s liquor distribution business recorded a 28.3% increase in net income to P230 million, after consolidated revenues climbed 24% to P2.1 billion. The company benefited from higher sales of Alfonso Light Brandy and Alfonso Brandy.

Office Warehouse, Inc., the company’s specialty retailing business segment, posted a 212% profit jump to P29 million. Revenues likewise grew 24.5% to P621 million. Same-store-sales growth was healthy at 18% from across 88 operating stores.

Meanwhile, the commercial real estate segment posted a net income of P313 million, 10.5% higher year on year, following a 5.4% uptick in total revenues to P641 million. — Arra B. Francia

Developer CPG posts 36% higher profit in Q1

Asian Century Center
CENTURY PROPERTIES GROUP, INC.

CENTURY Properties Group, Inc. (CPG) saw its earnings grow by 36% in the first quarter, on higher real estate sales and leasing revenues.

In a regulatory filing Friday, the Antonio-led property developer reported its net income attributable to equity holders of the parent company stood at P367.8 million in the January to March period.

Revenues went up 2.3% to P2.773 billion year on year.

Broken down, real estate revenues grew by 4.44% to P2.447 billion during the first quarter, “coming from the company’s affordable housing business and the additional substantial progress in construction and sales take up of its on-going in-city vertical developments.”

Leasing revenues also increased by 29.52% to P108.85 million due to the revenues generated from the start of operations of its new Asian Century Center, a 21-storey office building in Bonifacio Global City, Taguig.

“We continue to improve on our operational efficiencies while implementing the company’s expansion programs. The goal is to grow CPG’s new allied real estate businesses to have a diversified net income mix with more sustainable cash flow and recurring income. The company’s hard work has started showing positive results that will drive its growth in the medium to long term,” Ponciano S. Carreon, Jr., chief finance officer and head for investor relations of CPG, said in a statement.

The company announced that its affordable housing brand PHirst Park Homes sold more than 3,000 housing units with value at about P4.4 billion from three projects as of end of April this year. — V.M.P.Galang

Max’s income grows by 18% in Jan-March

Max’s Group, Inc. (MGI) grew its net income by 17.6% in the first quarter of 2019, as the company benefited from its strategic shift to franchising and other cost stabilization efforts.

In a statement issued Friday, the listed casual dining restaurant group said net income reached P146 million in the first three months of the year following a 4.2% rise in revenues to P3.4 billion. Systemwide sales also firmed up 3.4% to P4.6 billion.

“Our improved year on year performance is attributed to the effectiveness of our reshaped growth strategies in 2018, particularly our focus on franchising, cost stabilization, and customer-centric activities,” MGI President and Chief Executive Officer Robert F. Trota said in a statement.

The company noted that franchising income jumped 47.5% to P225.1 million against the P152.6 million seen in the same period a year ago. Commissary sales also went up seven percent to P404.1 million.

This came after MGI’s decision to have more franchised stores by 2022, with a ratio of 70% to 30% versus company-owned stores. Company-owned stores currently account for 60% of total stores, while the remaining 40% are franchised.

The strategy is also seen to accelerate its long-term expansion.

“Through the strategic capabilities that we have built over the years, notably analytics, restaurant systems and an integrated supply chain, we are generating a more profitable mix and increasing operational efficiencies,” MGI Group Chief Operating Officer Ariel P. Fermin said in a statement.

MGI opened a total of 14 new stores in the first quarter, two of which are located in the United Arab Emirates, one in Saudi Arabia, and one in Canada. This brings the company’s total store count to 706 outlets. — Arra B. Francia

Philippine Seven income drops 41% in 1st quarter

THE local licensee of 7-Eleven convenience stores reported a 41% profit decline in the first quarter of the year, as it used a new accounting rule that changes the recognition of leased properties.

Philippine Seven Corp. (PSC) said in a statement Friday that net income stood at P112.2 million, lower than the P190.5 million it posted in the same period a year ago. Systemwide sales meanwhile went up 18% to P12.54 billion.

The company noted that the International Financial Reporting Standards on Leases (IFRS 16), which took effect at the start of the year, pulled down profitability since most of its stores are under long-term lease agreements.

“IFRS 16 requires lessees to recognize an asset on the right to use the leased property (the right-of-use asset) and a liability, for the obligation to make lease payments…Unlike, the previous accounting policy, rental payments are recognized as expense evenly or on a straight-line basis over the life of the lease,” the company explained.

Without IFRS 16, net income would have grown 48.3% to P282.6 million.

PSC was supported by a 6.8% same store sales growth and higher number of operating stores. The company ended the quarter with 2,593 7-Eleven stores, following the addition of 56 branches and closure of 13. — Arra B. Francia

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