Combined net profit of listed firms down 22.6% in Q1

The combined net profit of publicly listed Philippine companies shrank 22.6 percent in the first quarter to P106.98 billion from a year ago as earnings by the industrial, holding firms and services sectors faltered.

In a Philippine Stock Exchange study culled from the first quarter financial statements filed by 228 of 247 listed firms, the financial performance of corporate Philippines was mixed in the first quarter. An increase in earnings reported by the financial, property and mining/oil counters failed to compensate for the slack in the industrial, holding firms and services sectors.

For the top companies included in the main-share index PSEi, cumulative net profit fell 26.3 percent in the first three months compared with a year ago. The combined net income of PSEi companies comprised 65.6 percent of the total market net income.

Consolidated revenues of all listed companies increased 10 percent to P857.78 billion from P779.80 billion in the first three months of 2010, the PSE said in a study released Tuesday.

“The first quarter earnings of our listed firms reflected the slower growth of our economy after coming from an election year and dealing with tighter government spending. It appears that this is also a consolidation phase similar to what our market experienced after a phenomenal run last year,” PSE president and chief executive Hans Sicat said in a statement.

“Despite the early results, investors remain upbeat on the prospects of our listed companies as evidenced by the PSEi hitting a new record high. Hopefully, our firms’ second-quarter corporate earnings, which should be released between this month and the next, will be able to validate this renewed confidence,” Sicat said.

In terms of corporate earnings by sector, the industrial group saw a 47.6-percent decline in profit as some companies generated lower revenues. For instance, First Philippine Holdings Corp. was hit by lower electricity sales and reduced equity in net earnings of associates.

A nonrecurring gain from the acquisition of San Miguel Brewing International Ltd. in the comparative period last year caused a drop in San Miguel Brewery Inc.’s net income. Aboitiz Power Corp. and Energy Development Corp. also saw a reduction in net profits on account of lower sales volumes and lower average selling prices.

The net income of holding firms also declined 21.3 percent due to lower profits of listed companies’ subsidiaries. Lopez Holdings Corp. was affected by the decline in First Holdings’ net income as well as ABS-CBN Corp.’s lower revenues that, in turn, were attributed to the absence of election-related advertisements. Aboitiz Equity Ventures’ net income also fell as its subsidiaries, Aboitiz Power Corp. and Pilmico Foods Corp., booked lower incomes as average selling prices weakened.

In the services counter, index heavyweight PLDT also experienced a decline in net income as its wireless and fixed line business segments posted lower revenues and a decline in foreign exchange gains. The jump in average aviation fuel prices also took its toll on airline operator Cebu Air Inc. while the absence of political advertisements also pulled down GMA Network Inc.’s television and radio airtime revenues.

Collectively, the consolidated income of the services sector slipped 7.1 percent.

On the other hand, the financial sector posted a combined net income growth of 1.1 percent. Metrobank and Bank of the Philippine Islands grew their net income as their volumes of interest-bearing assets improved. On the other hand, Banco de Oro Unibank Inc. benefited from higher service charges and fees as well as gains on foreign exchange.

The property sector registered a 19.4-percent increase in net income. Increased revenues from real-estate sales through improved sales volumes of both residential units and commercial lots boosted the earnings of Ayala Land and SM Development Corp. SM Prime Holdings Inc. also grew its rental revenues as new malls were opened and old malls underwent expansions.