Philippine businesses more optimistic about recovery in 2022

Iris Gonzales - The Philippine Star

MANILA, Philippines — The country’s conglomerates and listed companies all felt the lingering impact of the COVID-19 pandemic this year.

Many of the country’s tycoons were resigned to the new normal of another year where business was slower or struggling to survive.

Economic activities such as retail, consumer spending and acquisitions, after all, remained muted for most of 2021.

Some tycoons have aged and are visibly stressed, with some even getting sick and eventually surviving the COVID-19 virus.

But many of the country’s tycoons expressed hopes that 2022 would be better.

Nine-month results

Ayala Corp., the country’s oldest conglomerate reported a net income of P19.4 billion from January to September, up 70 percent on improved performance of most of its business units.

Core net income, which isolates the effect of divestment gains, higher loan loss provisions, re-measurement losses and the net retroactive effect of the CREATE law, was flat at P19.3 billion during the nine-month period.

In the third quarter alone, stripping out the impact of the gains, Ayala’s core net income still grew 27 percent to P6 billion, driven by higher contributions from Ayala Land, Globe, AC Energy, AC Health and AC Ventures.

Ayala president and CEO Fernando Zobel de Ayala said the improving business environment demonstrates how organizations have adapted and readjusted themselves more than a year into the pandemic.

“With the pace of inoculation ramping up, we look forward to a further reopening of the economy and sustaining this positive trajectory,” Zobel said.

JG Summit Holdings Inc., the Gokongwei-led conglomerate, reported that its recovery was halted by a weaker third quarter brought about by the reimplementation of stricter quarantine measures.

In terms of profitability, JG Summit posted narrower margins in the third quarter of 2021 due to record-breaking cost inflation, which weighed down Cebu Air Inc., JG Summit Petrochemicals Group and Universal Robina Corp.

With this, core net income in the nine-month period declined versus a year ago to P948 million, albeit still on a positive territory.

Excluding airline, JG Summit’s nine-month core net income and net income amounted to P14.5 billion and P12.3 billion, up 36 percent and 22 percent year-on-year, respectively.

The relatively slower net income growth was mainly attributable to a net forex loss of P3.9 billion as the peso depreciated against the US dollar, cushioned by the favorable impact of the CREATE law, JG Summit said.

JG Summit president and CEO Lance Gokongwei, however, said that while the third quarter presented challenges to some of its group’s subsidiaries, there has been recovery in consumer demand for products and services as COVID vaccination accelerates and mobility restrictions eased starting November.

“We anticipate these developments to positively impact our airline, hotels, malls and food segments. While the sentiment is getting better, our margins will be affected by inflationary pressures driven by higher oil and input prices as well as the devaluation of the peso. Our plan is to manage these headwinds through better pricing and cost management measures. Overall, we remain optimistic that the situation will continue to improve and JG Summit will benefit from the diversity of our portfolio and the strength of our balance sheet. We expect to pivot back to recovery in 2022 and reach pre-COVID levels by 2023,” Gokongwei said.

Pangilinan-led Metro Pacific Investments Corp., for its part, reported a core net income of P9.5 billion during the nine-month period, up 23 percent from P7.7 billion in the same period last year.

This substantial improvement from the 13 percent growth in the first half of the year was largely driven by improved traffic on its toll roads and higher volume of electricity sold by Manila Electric Company, MPIC said.

Moving forward, MPIC chairman Manuel Pangilinan said 2022 should be a better year for the company with prospects of economic recovery.

“This COVID19 health crisis has forced us to reassess our priorities and draw the line between what’s essential and what’s not. Critical to us at MPIC is service continuity amid recurring mobility restrictions, and we have worked hard to deliver on that commitment to the communities we serve. As we look forward to 2022, we draw our attention to other essential priorities, foremost of which are innovation and digital transformation. We have been laying the groundwork across our core businesses with Meralco implementing digital solutions to address customer needs, Maynilad using the most advanced leak detection technologies, and MPTC inaugurating its digital mobility solutions. We intend to further explore opportunities in the digital space especially those that will make our operations and facilities even more efficient,” he said.

Lucio Tan-owned LT Group Inc., meanwhile, reported an attributable net income of P9.95 billion during the nine-month period, lower than the P16.1 billion reported for the same period in 2020.

The 38 percent decline was mainly due to the higher provisioning for credit losses booked by its banking subsidiary and the elimination of the gain from the transfer of real estate assets at the consolidated level.

GT Capital Holdings Inc., the listed conglomerate of the Ty Group, meanwhile, reported a consolidated net income of P8.7 billion in the nine month period, up 168 percent from P3.2 billion a year ago.  Core net income increased by 115 percent to P8.1 billion, driven by the banking, automotive and property businesses.

Its businesses include banking through Metropolitan Bank & Trust Co., automotive through Toyota Motor Philippines (TMP), property through Federal Land Inc. and insurance through AXA Philippines.

GT Capital president Carmelo Maria Luza Bautista said despite the stringent lockdown imposed in August, GT Capital’s consolidated nine months results rebounded strongly across all sectors.

“Noteworthy growth rates were realized in our auto, property and financial services subsidiaries. The more recent decline in reported COVID-19 cases, the lifting of mobility restrictions, and the increased number of fully vaccinated individuals in key cities have resulted in a noticeable resurgence of consumer confidence,” Bautista said.

The gradual return to pre-pandemic conditions will result in positive momentum for the last quarter of the year, paving the way for an even more robust recovery in the coming year and toward the company’s full recovery.

Alfred Ty, GT Capital co vice-chairman and Toyota Motor Philippines Corp. chairman, said the group is optimistic that the economy will recover above the six percent GDP level not only because of the election season but also because of the overall improvement of the economy worldwide.

It was a mixed bag of good and bad results for some of the country’s listed conglomerates but the captains stirring the ships are looking to 2022 with more hope that the journey would be easier than the year that was.


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