By Jenniffer B. Austria
The largest conglomerates in the Philippines stay bullish about the prospects for the second half of 2023 as core businesses delivered strong results despite market headwinds.
While elevated inflation and interest rates remain major risks to the consumer-driven economy, corporations continue to benefit from robust consumer spending, consistent with the overall economic growth, record low unemployment and recent wage hike implemented by the government.
The conglomerates’ widely-diversified businesses also allow them to control risks by smoothing exposure concentrations to certain business lines and markets.
SM Investments Corp. reported a 32-percent growth in consolidated net income to P36.5 billion in the first six months of 2023. GT Capital Holdings Inc. logged a double-digit growth in first-half net income to P13.4 billion, while JG Summit Holdings Inc. posted a seven-fold increase in core net income to P9.5 billion.
Other conglomerates also booked billions in profit in the six-month period. San Miguel Corp. earned P23.3 billion; Ayala Corp., P20.5 billion; DMCI Holdings Inc., P15.9 billion; LT Group, P13 billion; Aboitiz Equity Ventures, P10.5 billion; Metro Pacific Investments Corp., P10.22 billion; Alliance Global Group Inc., P9.2 billion; Villar’s Vista Land & Lifescapes Inc., P5.8 billion; Cosco Capital Inc., P5.6 billion; Filinvest Development Corp., P3.9 billion; and Lopez Holdings Corp., P3.25 billion.
SM Investments head of investor relations Timothy Daniels said in an investor conference the conglomerate, which has investments in retail, property and banking sectors, historically gets bulk of its earnings in the second half of the year because of holiday spending in the fourth quarter.
Daniels said with the school opening moved to the third quarter, this would further boost the group’s second-half earnings. He said consumer discretionary spending seen in the first half of 2023 looked sustainable going into second half.
The Sy-led conglomerate said it would continue to monitor current market conditions, including inflation and interest rates moving forward.
“Fundamental story is still good in the Philippines. There is clearly a little more softness in GDP [gross domestic product] and in inflation numbers. But if we look at overall growth story, we still believe in the Philippines growth and its underlying story,” Daniels said.
“There are things to watch, it is never a slam-dunk, but we are coming into the second half of pretty robust position,” Daniels said.
GT Capital Holdings of the Ty family may reach a record P25-billion net income in 2023 following the group’s strong first-half results.
GT Capital executive vice president and chief finance officer Francisco Suarez, Jr. said annualizing the P13.4 billion core net income in the first half could mean full-year earnings of more than P25 billion.
“We continue to be bullish on our operating companies, the bank and also for Toyota Motor Philippines and Federal Land,” Suarez said in a recent investor conference organized by the Philippine Stock Exchange and Bloomberg.
Suarez said the group’s property business would continue to launch new residential, commercial and industry projects as it pushed joint venture with Japan’s Nomura Real Estate Development Co. Ltd.
Its automotive unit will benefit from newly-introduced vehicles and increased interest on hybrid vehicles. TMP sold 1,054 hybrid cars in the first six months of 2023, up 23 percent from a year ago. Sales from hybrid cars accounted for 1.1 percent of total sales.
As the group has enough cash to support operations, GT Capital said it would continue paying down debt and retire perpetual preferred shares due in the third quarter of the year.
JG Summit Holdings Inc. of the Gokongwei group said it put in place measures to tackle inflation and implement efficiencies to recover margins.
It said to ensure sustained growth, it is working double time to augment capacity and improve operational resiliency by adding more planes for Cebu Pacific. Property unit Robinsons Land continues to launch residential and improve occupancy rates for its office, mall and hotel projects.
Manufacturing subsidiaries URC is addressing supply chain issues to increase order fill rates, while petrochemical unit ramped up operations after months of being shut down.
“I am confident that we would be able to sustain this positive momentum for the balance of the year as we proactively carry out initiatives to stay ahead of the curve,” JG Summit president and chief executive Lance Gokongwei said.
