Cosco, Thai partner drop P500-M JV plan

Cosco Capital Inc. and its Thai partner have dropped plans to establish a P500-million joint venture amid a challenging environment for the home improvement segment.

The liquor and supermarket holding company led by billionaire Lucio Co said in a stock exchange filing on Thursday that the decision to terminate its agreement with Siam Global House Public Co. Ltd. was “mutually arrived at after strategically reviewing the current market conditions.”

Cosco entered into the multimillion-peso joint venture agreement with Siam Global in June 2022 to establish a retail shop or warehouse for building construction-related materials, home and garden decorative goods, home improvement goods, construction equipment and tools.

READ: Cosco hits double-digit earnings growth

Cosco was supposed to own 45 percent of the joint venture, and Siam Global the remaining 55 percent.

This comes amid the current weakness in the home improvement market, as seen in the dip in earnings of the sector’s listed firms. The market’s popularity skyrocketed during the pandemic, when stringent health restrictions allowed customers to pursue do-it-yourself home projects.

The deal would have paved the way for Cosco, which has interests in supermarkets, liquor, real estate and energy, to enter a new business segment.

“The transaction is in line with the expansion program of Cosco Capital which would enable it to invest through a joint venture with a foreign group into a new line of business that will be accretive in terms of investment income for the company,” Cosco said in an earlier disclosure.

In the first nine months of the year, Cosco booked a 10-percent growth in earnings to P10 billion on the continued recovery of consumer spending.

Revenues likewise rose by 9.1 percent to P164 billion in the January to September period.

Grocery retail under Puregold Price Club and S&R Membership Shopping Club inched up by 4.5 percent to P6.9 billion due to higher foot traffic. Both contributed a combined 69 percent to Cosco’s net income.

Net sales reached P151.97 billion, up by 9.1 percent, on the back of store expansion and higher same-store sales.

In September, Co completed the takeover of a second renewable energy firm via a P1.02-billion deal for a hydroelectric power plant in Nueva Vizcaya.

The company also took over Catuiran Hydropower Corp. for P551.88 million in March, marking Co’s entry in the sector and joining big tycoons already in the renewable energy market.