Phinma unit seen to breach P1B mark

MANILA, Philippines–Phinma Education, operator of a chain of four local tertiary educational institutions, is expected to breach the P1-billion turnover mark this fiscal year ending March 2015, cementing its position as the Phinma group’s biggest cash cow to date.

By the end of fiscal year 2014-2015, Phinma Education will have generated about P200 million in net profit—up by about 25 percent from the previous year, company president Chito Salazar said in a briefing Thursday.

The P1 billion in overall profit expected this fiscal year is way above the P845 million reported in 2013. To date, Phinma Education contributes about 60 percent to group-wide business, partly due to the higher attributable equity ownership against those in power businesses.

The Phinma group, which has entered the education business through the acquisition of existing institutions in the last decade, is keen on making further acquisitions. The plan is to establish operations in Metro Manila and Cebu, as well as in four new areas: Baguio City, Bicol, Batangas and Davao City. Salazar said the group was looking for tertiary institutions to acquire in these areas.

In the last 10 years, Salazar said Phinma Education’s story has been that of growing profitability, student enrollment and board passing rates while defying the industry-wide trend of 8-10 percent average annual rise in tuition.

Citing standardized systems and a lean management team, Salazar noted that Phinma had kept tuition from rising. It even dipped from an average of P28,800 in 2009 to P26,000 in June this year.

At the University of Iloilo, tuition has gone down by as much as 20 percent.

Also, Salazar said improved efficiency had allowed the network to expand its scholarship program. Through the “Handog Kaibigan scholarship,” the school provides a 50-percent tuition subsidy to 30 percent of the college population.

“We’re continuing to find ways to make education costs lower while not sacrificing quality,” Salazar said. “Making high-quality education profitable and affordable are not two separate tasks—they are one and the same task.”

The group has been able to boost efficiency by offering “bare bones, no frills” education, he explained.

“We’re not focusing on academic research. We concentrate on good teaching. We don’t drive them to publish, we demand them to teach well,” he said, referring to the faculty.

Phinma Education reported a 17-percent growth in the last two years. Its student population stood at 37,000—six times higher than in 2004 when the group first entered the education business.

For its acquisitions, the company may be willing to spend as much as P3 billion, said Phinma Education chief finance officer Daisy Montinola. For acquisitions in the provinces, the cost may range between P250 million and P500 million, she added.