FDC and FLI president Josephine Gotianun-Yap. INQUIRER file photo
Bucking the earnings downturn caused by the coronavirus pandemic, Gotianun-led conglomerate Filinvest Development Corp. grew its attributable first quarter net profit by 8 percent year-on-year to P3 billion due to robust earnings from its banking business alongside group-wide cost control measures.
Total revenues declined by 2 percent year-on-year to P20.55 billion but this was more than offset by a 27-percent drop in consolidated expenses to P5.99 billion, FDC disclosed to the Philippine Stock Exchange on Thursday.
Meanwhile, operating expenses increased by 27 percent largely due to provisions for losses made by EastWest Bank in anticipation of the economic fallout resulting from the effects of COVID-19.
“We are in unprecedented times. The events continue to unfold and we cannot ascertain the full impact of the disruptions brought about by the COVD-19 pandemic. The government declared an enhanced community quarantine (ECQ) in mid-March to give the Philippines time to build up its health care arsenal,” FDC president and chief executive officer Josephine Yap said.
“Beyond financial and scenario planning, FDC and its subsidiaries answered the pandemic with clear protocols to safeguard the health and safety of the Filinvest family. We responded quickly to address our customers’ needs and provided financial relief such as rental waivers, deferment or loan term extensions during the ECQ period. These have impacted on our results for the first quarter,” she added.
EastWest Bank delivered a net income contribution to the group of P2.3 billion in the first quarter of 2020, 75 percent higher than the same period last year, driven by better margins from its core lending and deposit-taking businesses, and higher trading gains.
On the other hand, the ECQ took a heavy toll on FDC’s real estate business, composed of listed subsidiary, Filinvest Land Inc. (FLI), and Filinvest Alabang Inc. (FAI). Sale of lots, condominium and residential units declined by 40 percent to P3.4 billion in the first quarter, while net income contribution to the group fell by 26 percent to P1.5 billion. This was largely due to the lower sales take-up in 2019 and delays in the completion of projects brought about by the construction halt in mid-March.
A grace period for the payment of its homebuyers was likewise granted during the ECQ period which affected real estate sales recognition. Filinvest waived rental payments for establishments that were not operational during the ECQ period.
Power subsidiary, FDC Utilities, Inc. (FDCUI), reported a 5-percent decline in first quarter revenues to P2.2 billion, bringing net income to P511 million, as demand from its customers contracted in the latter part of March due the imposition of the ECQ.
FDCUI’s plant, located in Misamis Oriental, remained fully operational even when the area was in ECQ. FDCUI operates an aggregate 405-megawatt clean coal plant that is the largest operating baseload power plant in Mindanao. With the gradual easing of the ECQ, FDCUI assured that various precautionary measures were in place to serve its customers such as rotation setup for its work force, strict adherence to personal hygiene practices, mandatory temperature checks and social distancing protocols, and frequent proper sanitation and deep disinfection of plant premises.
The imposition of travel restrictions and quarantine measures as early as January also battered the hospitality business. Hotel operations under Filinvest Hospitality Corp. saw a 21-percent decline in revenues to P689 million in the first quarter, bringing net income contribution to P15.6 million as occupancy rates dropped during the quarter.
Five out of the six hotels and resorts under the Filinvest group’s portfolio remained in operation during the ECQ but on very limited basis to accommodate business needs.
Crimson Boracay temporarily ceased operations while the entire island of Boracay was on lockdown. Quest Tagaytay was used as a quarantine facility for overseas Filipinos and other returning overseas Filipinos, while Crimson Alabang and Quest Clark were used by business process outsourcing (BPO) employees.