Companies are reporting declining profits for the first half of the year as a result of the new coronavirus disease 2019 (COVID-19) pandemic, as the seasonal corporate filings gets on the way.
Listed firms have until August 15 to file their respective financial statements, outlining the results for the second quarter and the consolidated first half of the year.
SM Investments net plunges 69%
The conglomerate netted P7.1 billion for the first six months of 2020, down 69 percent from last year’s P23 billion. Revenues was at P185.5 billion, down 21 percent from P233.7 billion.
“Our half year financial results are within our overall expectations, given the context of the lockdown due to the COVID-19 outbreak which had a greater impact in the second quarter. The results also reflect the group’s continued financial prudence and conservative balance sheet after our banks made substantial provisions for potential customer delinquencies,” said Frederic DyBuncio, SM Investments president.
“Our food retail and residential property businesses have continued to perform well despite the pandemic as have the core businesses of our banks. The current environment has been most challenging for our non-food retail and mall operations which have adapted quickly to new customer needs and critical safety considerations. All our businesses will continue to prioritize health and safety as well as convenience for our customers and stakeholders,” he added.
SM Investment’s retail business under unit SM Retail posted profit of P522 million, down 90.84 percent from P5.7 billion last year, over revenues of P139.2 billion, down 18 percent.
The group’s property businesses under SM Prime Holdings Inc., meanwhile posted a profit of P10.4 billion, down 46 percent from P19.3 billion last year, as revenues hit P43.7 billion, down 23 percent from P57.0 billion.
SM Prime’s mall income dropped 44 percent to P13.1 billion from last year’s P23.3 billion on the back of lower mall revenues. The residential business under SM Development Corp. (SMDC) posted revenues of P23.7 billion, up 11 percent from P21.4 billion last year. SM Prime’s commercial properties at the same time posted revenues of P2.5 billion, up 16 percent, while the hotels and convention centers business posted P1 billion in topline due to limited operations.
The banking business under BDO Unibank, Inc. (BDO) reported profit of P4.3 billion, down 78.61 percent from P20.1 billion last year, amid a P22.4-billion provisioning for potential delinquencies due to the COVID-19 pandemic. Net interest income went up 17 percent. Customer loans rose 11 percent to P2.3 trillion while total deposits went up by 9 percent to P2.6 trillion.
China Banking Corp. meanwhile, posted P5.2 billion in profit, up 24 percent. Net interest hit P16.2 billion, up 39 percent on the back of higher volume of earning assets and lower funding costs as market interest rates declined. Loan portfolio expanded 11 percent to P593 billion. Total deposits grew 3 percent to P773 billion.
SMC’s food arm profit falls 50%
San Miguel Food and Beverage generated P7.34 billion in profit for the first half, down 50 percent from P14.7 billion.
Revenues stood at P122.82 billion, down 18.71 percent from P151.1 billion last year, as “the full impact of the COVID-19 pandemic weighed” on its volume performance in the second quarter, especially for its beer and spirits divisions.
Earnings before interest tax depreciation and amortization stood at P17.67 billion, down P8.89 billion
San Miguel said the effect of the COVID-19-related restrictions was most pronounced from mid-March to mid-May, characterized by liquor bans across key cities and closures of food service and retail establishments, as well as limitations on movement and delivery of goods to the trade due to checkpoints.
San Miguel Food and Beverage remains optimistic given actual volume recovery that started mid-May and continued to July, with beer posting a double-digit volume increase from June to July. Spirits volumes, on the other hand, remained strong, with July volumes higher year-on year. On the food side, there has been an increase in the number of food service and institutional customers resuming operations, paving the way for a recovery in the segment in the coming months.
Century Pacific sales, profit rise
Food canner Century Pacific Food Inc. (CNPF) registered a profit hit P2.24 billion, up 31 percent from P1.69 billion. Revenues was at P25.12 billion, up 28 percent from P19.61 billion last year.
“We continued to see heightened demand for our shelf-stable products through the months of April, May, and June as quarantine measures and fear of going out persisted leading to consumers spending more time at home and cooking their own meals,” said Oscar Pobre, Century Pacific chief finance officer.
“Our core branded products of marine and meat, which have long been staples of Filipino in-home consumption across all income classes, are benefitting the most from this trend, while sales growth in our emerging milk business has also held up with consumers gravitating toward value for money options,” he added.
Pobre said the company’s profitability improved with gross profit up by 36 percent, faster than the topline growth.
“Though we see the pace of growth starting to ease relative to the month of March, demand continues to exceed pre-COVID levels. At this point, we are likely to end the year exceeding 10 percent to 15 percent growth – our typical growth target during more normal times,” Pobre said.
Jollibee swings to loss
Quick service restaurant giant Jollibee Foods Corp. swung to a P11.96 billion loss for the first half, compared to a P2.5 billion profit last year.
Revenues stood at P62.76 billion, down 25.3 percent from P84.03 billion last year, over systemwide sales of P85.83 billion, down 24.5 percent from 113.77 billion.
Jollibee said at the start of the second quarter, 50 percent of its groupwide stores worldwide were temporarily closed.
“The business results were very bad but in line with our forecasts. We are now focusing on rebuilding our business moving forward along with implementing major cost improvement under our business transformation program. We expect sales and profit to improve over the next few months,” said Ernesto Tanmantiong, Jollibee chief executive officer.
“Our business building effort includes introducing exciting new products, launching new marketing campaigns, opening cloud kitchens, introducing improvement in our delivery systems and opening new stores at selected locations particularly in North America, Vietnam, Malaysia and China,” he added.
Tanmantiong said that despite the challenging environment, Jollibee expects to open a total of 338 stores worldwide this year.
Jollibee in a statement also said its financial performance will get “progressively better” in the next two quarters of the year as stores will have been being reopened and sales will have been gradually building up.
D&L Industries still optimistic
Mid-process goods manufacturer D&L Industries Inc. is optimistic for the rest of the year despite a 43 percent drop in profit for the first half at P802 million, compared to P1.41 billion. Sales was at P10.17 billion, down 8 percent from P11.04 billion last year.
Alvin Lao, D&L president, said sales “have been recovering since hitting bottom last April due to the pandemic lockdown.”
Lao said the weak earnings in the first half was mainly due to the lockdown imposed in the capital, dragging with it the economy as a whole.
“Despite the challenging first half of the year, we remain optimistic and see a gradual recovery as restrictions ease in the country. We continue to sense that things are getting better each month as more and more of our customers are able to ramp up operations under the new normal. A possible monkey wrench, however, is a second wave that can return us to a stricter quarantine,” he said.
“In June, we started seeing a pick up in activity, albeit still lower than pre-quarantine levels, due to pent-up demand and as the government started easing restrictions by shifting Metro Manila to a general community quarantine (GCQ),” Lao added.
Lao said D&L may net around “P900 million to P1 billion” in the latter half of the year, “approximating the performance in the first half of the year.”
Metro Pacific’s core down 38%
Metro Pacific Investments Corp. said its profit for the first half stood at P3 billion, down 62.96 percent from P8.1 billion a year ago.
Core profit was at P5.3 billion, down 38 percent from P8.7 billion last year, “owing largely to the economic contraction stemming from the Philippine fovernment’s quarantines to contain the spread of COVID-19.”
“The quarantine reduced toll road traffic, mandated the suspension of rail services, and decreased commercial and industrial demand for water and power resulting in a decrease in contribution from operations of 31 percent,” it said.
Topline was reported at P30.71 billion, down 16.93 percent from P36.97 billion.
“The quarantine reduced toll road traffic, mandated the suspension of rail services, and decreased commercial and industrial demand for water and power resulting in a decrease in contribution from operations of 31 percent,” the company said.
MPIC said power accounted for 68 percent of net operating income; water contributed 23 percent, and tollroads contributed 12 percent. Its other business, mainly hospitals, rail, and logistics incurred a combined loss of P236 million.
“The decline in our half year earnings is mainly due to Government’s COVID-19 movement restrictions which affected transportation and transportation-related businesses. Our power and water operations fared much better. Service levels have been maintained, but we had mixed success in communicating with our customers on the billing effects of the estimated meter reading rules we were required to follow; this is now being rectified. Our thousands of hardworking front-line staff have been selfless in their dedication, especially our frontline doctors and nurses who are directly exposed to COVID risks. We owe all of them an inestimable debt of gratitude,” said Manuel Pangilinan, MPIC chairman.
Filinvest Land rental revenues inch up 1%
Realtor Filinvest Land Inc., (FLI) meanwhile said profit for the period was down 24 percent at P2.42 billion, from P3.04 billion, in 2019.
Revenues hit P8.81 billion, down 30 percent from P12.62 billion.
“The results reflect the full impact of the community quarantines from mid-March to June which hampered operations and delayed construction activities,” said Josephine Gotianun-Yap, FLI president.
Rental revenues slightly increased by 1 percent to P3.42 billion, with the growth in office leasing offsetting the decline in retail mall revenues. Gotianun said FLI’s office buildings continued to enjoy high occupancy rates and remained operational during the ECQ period, though most parts of FLI’s malls were closed for the duration of the ECQ, with the exception of essential services such as supermarkets, drugstores and banks.
FLI waived rent for establishments which were not operational during the ECQ period. As Metro Manila and other cities transitioned to general community quarantine (GCQ) from June to August 3, FLI malls were 60 percent operational with more establishments allowed to open.
Real estate sales stood at P4.56 billion, down 46 percent due to lower sales take-up coupled with revenue recognition delay brought about by the construction restrictions during the quarantine period. FLI also granted a grace period in homebuyers’ payments as support to its customers while under ECQ which affected real estate sales recognition.
“There were no residential projects launched in the second quarter, but the company plans to launch P11.3 billion worth of residential projects for the rest of the year,” the company said.
Marcventures swings to profit
Nickel miner Marcventures Holdings Inc. (MHI) booked profit of P37.8 million compared to a P388.8 million loss last year. The company attributed the recover to increased tonnage and reduction of mining and overhead costs by 30 percent.
“The parent company had to step in for 2019 and made wholesale changes by fully revamping mine management and making changes in the Marcventures Mining and Development Corp. (MMDC) management to recover profitable operations. MMDC actually operated without a chief executive officer for 2019…,”
Isidro Alcantara, MHI president, said.
Alcantara expressed optimism the company will be able to record further increases in tonnage and the combination of cost efficiencies and improving nickel prices to continue better prospects.