By: Miguel R. Camus - @inquirerdotnetPhilippine Daily Inquirer
Flag carrier Philippine Airlines is bracing for fresh challenges in 2017, as it deals with potential lower traffic following the declaration of martial law in Mindanao apart from fierce competition and the higher cost of fuel, for which cost-savings measures are already being implemented.
PAL president Jaime Bautista said during the company’s annual meeting yesterday that revenues would take a hit after President Duterte ordered martial rule in Mindanao, in response to a Muslim extremist attack in Marawi City.
“The present situation in Mindanao will result in some cancellations and rebookings, which we are now experiencing,” Bautista said, adding these were on both domestic and international flights.
He said it was still too early to asses the full impact, given that the situation in Mindanao had yet to be fully resolved.
“We don’t know yet how much more we will expect,” said Bautista, as he noted that cancellations so far had been minimal.
The issues in Mindanao came as PAL was already expecting operating difficulties in 2017, and in the midst of the airline’s negotiations to take in a foreign strategic partner within the year.
“The outlook is that competition will remain stiff, there is still overcapacity in the market,” Bautista said.
He was mainly referring to the Middle East. PAL announced this week it would suspend flights to Abu Dhabi on July 8 this year. A day after, Cebu Pacific Air said it would also suspend flights to Doha, Qatar; Riyadh, Saudi Arabia and Kuwait over the next two months.
Moreover, higher costs were cutting into PAL’s bottomline. Bautista said the carrier had implemented a freeze-hiring policy on certain positions. He added that PAL would study its fuel hedging policy and implement fuel saving measures.
There was also the option to increase ticket prices, should the cost of fuel continue to rise.
“We may impose higher fares for us to be able to recover additional costs,” Bautista said.
PAL’s listed operator, PAL Holdings Inc., swung to a loss in the first quarter of 2017 as the airline saw the price of fuel jump by over 50 percent.
PAL Holdings Inc. posted a net loss of P1.13 billion from January to March this year, a reversal of the P2.9 billion profit announced in the same period last year.
The carrier, nevertheless, saw better sales during the period. PAL Holdings said total revenue hit P33.32 billion in the first quarter, up 14.4 percent, as it added more flights and served more passengers. However, this was not enough to offset a steep increase in terms of costs.
Inquirer calls for support for the victims in Marawi City
Responding to appeals for help, the Philippine Daily Inquirer is extending its relief to victims of the attacks in Marawi City
Cash donations may be deposited in the Inquirer Foundation Corp. Banco De Oro (BDO) Current Account No: 007960018860.
By: Daxim L. Lucas - Reporter / @daxinqPhilippine Daily Inquirer
Eight of the country’s largest corporations—the holding firms of Philippine conglomerates and some of their large operating units—were named among the world’s biggest public companies in a list published by US-based business magazine Forbes.
Together, these Filipino corporate giants on the list had a combined market value of $72.4 billion or P3.6 trillion at current exchange rates.
Their combined sales hit a total of $40.6 billion, or P2 trillion, accounting for roughly 14 percent of the country’s $300-billion economy.
In terms of asset concentration, these eight firms held $176.6 billion worth of assets, equivalent to P8.8 trillion pesos.
The Forbes list was led by SM Investments Corp. of the Sy family at the 823rd spot on the 2,000-company roster. The family’s patriarch, Henry Sy Sr., is also listed by the influential magazine as the country’s richest man.
SMIC booked $7.3 billion in sales last year, $650 million in profits, $17.3 billion in assets, and $17.8 billion in market value.
Not surprisingly, the second largest publicly listed Filipino firm is another Sy firm, BDO Unibank, coming in at the 1,018th spot.
This was followed by JG Summit Holdings Inc., the flagship company of the Gokongwei family, at the 1,151st spot.
“Forbes’ 2017 Global 2000 list faces much pressure amid unsteady geopolitical climates and slowing economies,” Forbes Media’s deputy editor for investing Halah Touryalai said in a statement. “Yet, in aggregate, these 2,000 companies have managed to come out stronger than last year, with increased sales, profits, assets and market values.”
“Despite slowing GDP figures, China and the US, whose companies make up more than 40 percent of the list, continue to dominate the top 10 list with financial giants,” he added. “This list illustrates that in spite of headwinds, the world’s dominant companies remain a steady force in an unpredictable and challenging environment.”
Taking fourth place among Filipino corporate giants was Ayala Corp., controlled by the Zobel family, with a global rank of 1,176.
This was followed by Top Frontier Investment Holdings of Ramon Ang at the 1,228th spot. The holding firm has interests in the energy sector and also holds the businessman’s stake in conglomerate San Miguel Corp.
Rounding out the list of the largest Philippine listed firms were Metropolitan Bank and Trust Co. of taipan George Ty (1,531st globally); Aboitiz Equity Ventures of the Aboitiz family (1,793rd), and Manila Electric Co., the country’s largest electricity distributor, controlled by the Metro Pacific group of Manuel Pangilinan (1,947th).
The ranking is based on a mix of four metrics: sales, profits, assets and market value.
Forbes’ list revealed that China’s banking giants hold steady at the top of the 2017 Global 2000 list. Industrial & Commercial Bank of China has been No. 1 for the fifth consecutive year. China Construction Bank remains No. 2. The other two of China’s “Big Four” banks – Agricultural Bank of China and Bank of China – dropped down on the list, but remained in the top 10. Berkshire Hathaway, the largest company in the United States, moves one spot up to No. 3. Others in the top 10 are JPMorgan Chase (No. 4), Wells Fargo (No. 5), Agricultural Bank of China (No. 6), Bank of America (No. 7), Bank of China (No. 8), Apple (No. 9) and Toyota Motor (No. 10).
The five regional airports previously scrapped from the pipeline of public-private partnership (PPP) projects will instead be funded by the government or by foreign assistance, the Department of Transportation (DOTr) said Wednesday.
The development, and operations and maintenance of the five regional airports will instead be executed using either official development assistance (ODA) or under the General Appropriations Act (GAA), which is the yearly budget allocation approved by Congress, the DOTr said.
The five regional airports project has a combined value of P108.19 billion: the P20.26 billion Bacolod-Silay Airport, the P30.40 billion Iloilo Airport, the P40.57 billion Davao Airport, the P14.62 billion Laguindingan Airport and the P2.34 billion New Bohol Airport.
“The expansion and upgrading of the airports via the GAA make the projects cheaper as cost of money is lower, thus, more beneficial to the public,” DOTr OIC and Undersecretary for Aviation Manuel Antonio Tamayo said.
"Through this decision, we expect project completion to be faster and more efficient. Further, this would help avoid legal issues with concessionaires that may cause regrettable delays," he added.
On Tuesday, the PPP Center announced that the DOTr has terminated the five regional airports project as a PPP venture.
In 2014, the PPP Center said it intended to bid out the bundled operation and maintenance of the airports under a single PPP project.
Among the companies that pre-qualified to make a bid for the project were:
Under the new terms approved by the National Economic and Development Authority (NEDA) in November 2016, the five airports PPP was unbundled into five separate projects.
The DOTr said it has ordered a refund of the fees paid by the companies that prequalified for the bundled projects and the bidding prospectus for the unbundled projects "at the soonest possible time." — Jon Viktor Cabuenas/VDS, GMA News
Partners Group. has agreed to acquire outsourcing company SPi Global Holdings Inc., which is partly owned by Pangilinan-led PLDT Inc., for $330 million.
In an emailed statement, PLDT said the global private markets investment manager will acquire its 18.32-percent stake, held by subsidiary PLDT Global Investments Corp. (PGIC), and the remaining stake from CVC Capital Partners Asia III.
"Completion of this acquisition by Partners Group will be subject to certain closing conditions. Cash distributions to PLDT will be determined after the acquisition is completed," the company said.
SPi is one of the world's largest and most diversified BPO service providers in terms of clients, geographic presence and capabilities.
It provides domain expertise in customer interaction, healthcare and publishing markets.
PLDT sold part of its BPO businesses in 2013, which at that time was owned wholly-owned subsidiary SPi Global, to Asia Outsourcing Gamma Limited – a company controlled by CVC Capital.
PLDT reported a 26 percent drop in core net income to P5.3 billion in the first quarter of the year, as revenue fell by 8 percent to P42.779 billion. — Jon Viktor Cabuenas/VDS, GMA News
San Francisco, Calif.—Even though the drought emergency is over, the damage has already been done. The drought and bark beetle infestation have killed more than 100 million trees in California, and U.S. Forest Service scientists expect elevated levels of tree mortality to continue into this year in some areas. That’s why Pacific Gas and Electric Company (PG&E) is working with local Fire Safe Councils, providing nearly $2 million in project funding to reduce the threat of wildfires.
“Nothing is more important than the safety of our customers, employees and the communities we serve. While most California counties received significant rainfall this winter, the tree mortality crisis will linger for years. And, as the Governor points out, the next drought could be around the corner. That is why we’re taking extraordinary measures to protect our electric infrastructure, and help local Fire Safe Councils dedicated to making communities more fire safe,” said Kevin Dasso, PG&E vice president of Electric Asset Management.
This year, PG&E will be funding 43 local Fire Safe Council and other 501(c)3 projects in 21 counties. Projects include fuel reduction, shaded fuel breaks, emergency access and chipping programs. This is the fourth consecutive year PG&E has funded local Fire Safe Council projects to help residents protect their homes, communities and the environment from wildfire. Many are focused on creating fuel breaks and emergency access to help CAL FIRE and local fire departments safely fight wildfires when they do occur.
"The drought in California has been declared over, but the ongoing threat of wildfires due to hot weather and rapid brush growth from the heavy rains, is now facing many communities in the state. The California Fire Safe Council (CFSC) is a leader in encouraging statewide fire prevention programs, and values the continuing collaboration and financial support that PG&E provides to California communities to implement fire prevention programs. It allows these communities to meet their fire prevention needs to protect lives, homes and properties," said Jerry Davies, Chairman of the California Fire Safe Council.
Working to Reduce Wildfire Threat
PG&E is working hard to reduce the threat of wildfires. The company inspects all of its overhead electric lines each year and also inspects trees along power lines in high fire-danger areas twice a year. As a result of these inspections, PG&E removed more than 236,000 dead or dying trees last year to prevent them from contacting power lines, starting wildfires or contributing to other public safety risks. This is in addition to the 1.2 million trees that PG&E works each year.
The company also created a dead tree wood clean-up program to help its customers. PG&E will manage the wood on property or haul away wood from dead trees felled by the company to protect power lines, at no cost to the homeowner, in qualifying counties where tree mortality is high. The wood is being sawn for use as lumber or chipped for use in biomass facilities to generate renewable energy.
As part of its summer fire detection patrols, PG&E will fly five planes over routes in the daytime, which is when fires are most likely to spark. Last year, PG&E detected and reported more than 140 fires, supporting a quick response to fires before they spread.
Japan-led Mitsubishi UFJ Financial Group (MUFG) has expressed intent to support the government's ambitious infrastructure spending program, the Department of Finance (DOF) said Sunday.
In an emailed statement, the DOF said officials of MUFG led by Managing Executive Officer and CEO for Asia and Oceania Takayoshi Futae said they "want to work together" with the country's infrastructure spending and "will help further expand the development of the Philippines."
Finance Secretary Carlos G. Dominguez III and Futae met during the 50th Annual Meeting of the Asian Development Bank (ADB) earlier this month, along with other officials such as MUFG CEO and Head of Asia Yasutaka Suehiro, and Head of Financial Institutions Frederic Cabay.
The government plans to pour as much as P8.2 trillion to finance the country's infrastructure needs over the next six years, with P860.7 billion allocated for big-ticket projects this year alone.
"We also want to develop medium-sized companies by encouraging them to partner with equally sized Japanese companies for more inclusivity in our development," Dominguez told the Japanese officials.
Socioeconomic Planning Secretary Ernesto M. Pernia earlier said the Philippines and Japan have already agreed to implement at least three mega infrastructure rail projects.
Japan also in January pledged a total of ¥1 trillion worth of ODA and private sector investments, aimed at creating business opportunities in the Philippines over the next five years.
The MUFG already has a presence in the Philippines, after acquiring a 20-percent equity stake in Security Bank Corp. through its commercial banking unit Bank of Tokyo-Mitsubishi UFJ Ltd. —ALG, GMA News
MANILA -- Philippine telecom giant PLDT said Friday its net income in the first three months of 2017 dropped 20% on the year to 4.97 billion pesos ($99.9 million) as wireless revenue kept shrinking and impairment losses from Rocket Internet continued to hamper the bottom line.
The impairment losses from PLDT's investment in the German e-commerce company reached 500 million pesos in the period, while higher expenses also hindered the telecom's net profit.
PLDT's share price dipped by as much as 4% at the time of the earnings release, but the stock recovered quickly as Chairman and CEO Manuel Pangilinan gave a positive outlook on the company's prospects. The shares closed at 1,755 pesos, up 1.9% from Thursday.
"In the medium term, as far as we could see, the growth of the industry will come from the [fixed-line business], and the wireless would grow at low single-digit numbers," Pangilinan said Friday.
PLDT's net income plunged by as much as 49% in the third quarter of 2016, but an internal reorganization and a shift in focus to the fixed-line business has ameliorated the slump.
Service revenue continued to decline, falling 7% on the year to 35.6 billion pesos. PLDT's wireless segment dropped 16% to 20.8 billion pesos, but the fixed-line business grew 10% to 16.9 billion pesos. On a quarter-to-quarter basis, service revenue dropped 1%.
"For now, we are in this sort of golden age of fixed [line]," the CEO said.
Household and business subscribers, excluding international, now comprise 52% of the company's revenue base, a proportion forecast to reach 56% by 2019.
PLDT shifted focus to fixed line following the exodus of over 5 million customers in 2015 to key rival Globe Telecom, which leads in offering expanded data services. PLDT controls around 70% of the fixed-line market.
Pangilinan said the first-quarter performance puts the company on track to meet its core profit target of 21.5 billion pesos for the year, up slightly from last year's 20.2 billion pesos. Barring "unusual circumstances," PLDT is poised to earn more than 5 billion pesos for each succeeding quarter of 2017, he said.
MIKHAIL FLORES, Nikkei staff writer http://asia.nikkei.com