MANILA, Philippines - The government-sequestered Coconut Industry Investment Fund-Oil Mills Group (CIIF-OMG) reported yesterday that its operating income doubled to P171 million last year, from only P82 million in 2009.
The CIIF-OMG also reported that its gross revenues increased by 57 percent to P14.187 billion.
Jesus L. Arranza, president and chief executive officer (CEO) of the CIIF-OMG, said the more than 100-percent increase in profit was achieved despite a P138-million interest expense that was incurred by the group on loans obtained from banks to fund its working capital requirements, particularly the purchase of copra.
“This substantial interest expense could have translated into added operating income if a portion of the cash dividends accruing on the San Miguel Corp. (SMC) shares owned by the CIIF-OMG were allocated as working capital for the Group,” Arranza said.
Arranza said the cash dividends accruing and paid on SMC shares of stocks increased from roughly P1 billion to P4.5 billion per annum from the time the shares were converted from common to preferred shares.
The cash dividends paid on the preferred shares are deposited in escrow with the United Coconut Planters Bank as directed by the Supreme Court.
“The CIIF-OMG will be formally requesting the PCGG and the Supreme Court to allow the use of a portion of the cash dividends to be used as revolving working capital to spare the group from incurring substantial interest cost that otherwise would have been reflected as income for the group,” Arranza said.
Arranza said coconut farmers stand to benefit from the positive operating income of the group since the Sandiganbayan had ruled that the CIIF-OMG is owned by the government “in trust for the coconut farmers.”
From July 2009 to June 2010, the CIIF-OMG generated an operating income of P154 million.
Cost-cutting measures limited the group’s total operating expenses to increase by only 12 percent from P658 million in 2009 to P738 million in 2010, allowing a huge increase in revenues during the year.