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Wednesday, November 22, 2017 | MANILA, PHILIPPINES
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Date posted: Friday, December 11, 2015 | Manila, Philippines

profit & loss makers

Winners, losers from cheap oil

WHEN OIL prices took a hit last year, consumers were the first to rejoice. It meant lower electricity bills and transport fares, as well as more money in their pockets. Household consumption, albeit growing a tad slower, remained robust and accounted for 57.3% of the economy’s output.

With lower costs, the consumer sector saw an improvement in their profitability. Companies that are part of the SM Group, whose businesses directly cater to the consumer market, dominated this year’s list of Top 50 Profit Makers. Except for Multi-Realty Development Corp., which is into real estate, 15 of the most profitable firms come from the wholesale and retail trade units of the SM Group.

The SM Group’s gamble on the consumer market is well-founded. In its most recent report, MasterCard said Filipino consumers are Asia’s most confident, with the the Philippines being the only country other than Bangladesh where consumer confidence improved.

Separately, Nielsen said Filipinos are now among the world’s most confident consumers, placing second next to Indonesia. Against the world average of 96 index points, the Philippines scored 120 in the Global Survey of Consumer Confidence and Spending Intentions.

ACE Hardware Philippines, Inc., which retails hardware and household goods, boasted a return-on-equity (ROE) of 345% in 2014. It netted P932 million from its gross revenue of P13.35 billion that year.

The increasing number subscriptions on postpaid cellular services, such as that of Digitel Mobile Phils., Inc., also reflects Filipinos’ bullish outlook. The firm widely known as “Sun Cellular” had grown its subscriber base by 16% to 1.7 million subscribers. Its broadband base also jumped 24% to 676,000. These, in turn, allowed Digitel Mobile to reverse its P1.51-billion net loss in 2013 to a P2.74-billion profit last year, making it the third most profitable in 2014.

Mining companies trailed wholesale and retail trade firms in terms of profitability, with seven having some of the highest ROE. Six were nickel ore miners that likely benefitted from Indonesia’s ban on ore exports. With the ban, Philippine companies filled demand coming from China.

Amid an era of plunging oil prices, Shell Philippines Exploration B.V. (SPEX), also under the mining and quarrying category, maintained the top spot as most profitable with an ROE of 489.2%. The operator of the Malampaya gas field ranked 66th in the Top 1,000 Corporations with a revenue of P25.51 billion, flat from last year. Net income fell 14.1% to P11.60 billion but SPEX was able to reduce its financial leverage to a ratio 1,957.9% from 2,538.1% previously.

For manufacturers, however, 2014 proved to be less profitable.

Industrial output took a hit from the congestion in Manila ports that took place from February to September last year. Of the 50 companies that recorded the biggest losses, 23 came from the manufacturing sector.

Manufacturers of electronic products suffered the most as they depend on overseas markets for their raw materials and sales. Integrated Micro-Electronics, Inc. posted P585 million in losses last year. The port congestion weighed down on the company’s operations with raw materials being delivered late, said its President Arthur R. Tan in October last year.

Amkor Technology Philippines, Inc., Samsung Electro-Mechanics Philippines Corp., Tong Hsing Electronics Phils., Inc., Yu Jin Optical Electronics, Inc. also posted hemorrhaged to the tune of P857 million, P316 million, P243 million and P131 million, respectively.

The National Economic Development Authority estimated that the economic losses brought about by the port congestion reached P70 billion.

Lafarge Holdings (Philippines), Inc. saw the biggest loss in 2014 at P8.82 billion, on higher cost of services against operating profits. Its gross revenue fell 51.2% to P2.68 billion.

Pilipinas Shell Petroleum Corp. followed with P8.49 billion in net loss, as the drop in fuel prices put a squeeze on margins. It remained the third top grossing company with a gross revenue of P224.79 billion, up by 12.8%.

*Send e-mail to 'Joch' at jbgonzales@bworldonline.com or follow her on Twitter.com @jochebedgon.

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