MANILA -- Consumer-centric Philippine conglomerates on Friday reported robust earnings growth from January to September, reflecting a domestic economy that is still strong despite delays in the government's infrastructure roll-out.
San Miguel, the biggest company by sales, logged a 20% increase in revenues to 597 billion pesos ($11.29 billion), driven by its core food and beverage business. Excluding the impact of one-off gains, net profit rose 21% to 43.8 billion pesos.
The company, which has diversified into power and infrastructure, early this week announced a plan to consolidate its liquor and beer business into San Miguel Pure Foods. President Ramon Ang said that after the consolidation, the company will sell a 35% stake for $3 billion, valuing the company -- which will later be named San Miguel Food and Beverage -- at around $10 billion.
SM Investments, the nation's most valuable conglomerate with a 1.2 trillion peso market capitalization, said its retail and shopping mall empire delivered 8% growth in consolidated net income to 23.8 billion pesos, as revenues grew by the same pace to 272.2 billion pesos.
JG Summit Holding, which has operations in foods, airlines and real estate, said its revenues grew 14% to 177.80 billion pesos, but net profit fell 7.9% to 21.2 billion pesos due to hedging losses at Cebu Air, its low-cost carrier. Without one-off items, it bottom line marginally grew to 22.7 billion pesos.
Ayala Corp., whose core operations are in real estate, banking and telecommunications, saw an 18% rise in net income to 23.2 billion pesos, as revenues rose by 22% to 201.53 billion pesos.
Conglomerates offering so called "sin products" and luxury items reported healthy earnings growth.
LT Group, a major tobacco and liquor producer, said net profit rose 9% to 6.83 billion pesos. GT Capital Holdings, the country's largest Toyota auto distributor with real estate and banking operations, said consolidated revenues rose 16% to 169.5 billion pesos. Net income rose 19% to 11 billion pesos driven by its banks and real estate projects.
Jollibee Foods, the homegrown fast-food group, said system-wide sales rose 14.5% to 123.38 billion pesos, while net income rose 16.3% to 5.11 billion pesos. The company ended September with over 3,600 outlets, 75% of which are located in the Philippines. CEO Ernesto Tanmantiong said that Philippine store expansion during the period grew at the fastest pace in at least five years.
Most financial reports showed growth rates during the first half were sustained during the nine-month period, offering a preview of how the broader economy performed in the third quarter ahead of the gross domestic product data announcement next week.
The Philippines' economy relies heavily on domestic consumption, which generates two-thirds of the nation's economy. Its recent economic boom has been underpinned by expansion of overseas remittances and business process outsourcing revenues.
Cash remittances grew 5.0% to $16.1 billion from January to July, according to the latest data, which suggests the $28 billion full-year target is on track. The BPO industry meanwhile expects $24.5 billion in revenues for this year, up 6.5% from last year.
In the first half, GDP grew 6.4%, below the government target of 6.5-7.5%. The World Bank last month cut its growth forecast to 6.6% from 6.8% on slow implementation of infrastructure projects. Some watchers, however, are still bullish.
"Based on the strong macroeconomic fundamentals, we remain optimistic that the positive momentum will be sustained for the remaining months of 2017," GT Capital President Carmelo Maria Luza Bautista said after disclosing the company's earnings on Friday.