Finance costs hit profits of Lopez Holdings in Q1

MANILA, Philippines—Media and power-based conglomerate Lopez Holdings reported a 12-percent year-on-year drop in first quarter net profit to P877 million on higher finance costs at some business units.

Unaudited consolidated revenues increased by 5 percent year on year to P23.56 billion. Sale of electricity under First Philippine Holdings Corp. (FPH) and equity in net earnings of associates, Philippine depositary receipts and a joint venture, mainly representing operations of ABS-CBN Corp., were flat.

“Our investees, FPH and ABS-CBN, continue to perform well, overcoming operational challenges in their bid to strategically expand their portfolio. We believe their new assets will provide new and improved revenue streams in the medium term,” said Lopez Holdings president, chief operating officer and chief finance officer Salvador Tirona.

The decline in the bottom line was traced to the 32-percent increase in finance costs at the level of business units associated with FPH.

FPH’s flagship unit, First Gen Corp. (FGEN), issued $300 million fixed-rate bonds in October last year while FGEN unit Energy Development Corp. issued P7 billion fixed-rate bonds in May 2013. FPH unit Rockwell Land also issued P5 billion bonds in November to partially finance its newest development, Proscenium. These were partially offset by the full payment of FPH convertible bonds in February 2013 and scheduled principal payments on loans of FGEN and associates.

The 5-percent growth in revenues was driven by the 140-percent increase in earnings from contracts and services generated from construction projects of FPH unit First Balfour Inc. and revenues from sale of merchandise (+49 percent) from transformer sales of the First Philec group also under FPH.

ABS-CBN’s net income increased by 7 percent for the period but Lopez Holdings’ economic interest in this broadcasting firm fell to 56 percent from 60 percent, with the entry of a strategic and financial partner in 2013.

FPH posted a 42-percent year-on-year decline in three-month net income to P1.029 billion in the first quarter on the back of a 5-percent increase in revenues. Sale of electricity accounted for 88 percent of revenues this first quarter versus 91 percent a year ago.

Formerly Benpres Holdings Corp., Lopez Holdings serves as the Lopez family’s holding company for investments in major development sectors. It is the controlling shareholder of ABS-CBN and FPH. In FPH, it has a stake of 46 percent.