Stockbroker Colfinancial.com said earnings of listed companies in the first half of the year jumped by a median rate of 45.5 percent.
Colfinancial.com said 54 of the 63 companies that it monitors reported better earnings while nine companies posted weaker results for the period.
“The number of companies reporting losses also declined to only seven from 15 during the same period last year. Not surprisingly, companies that continued to post losses belonged to the travel and tourism and retail sectors which were among the hardest hit by the pandemic,” it said.
The improvement in earnings was due to factors like “looser quarantine restrictions in the second quarter of this year compared to last year, aggressive cost cutting measures, and the lower effective tax rate due to the passage of the CREATE (Corporate Recovery and Tax Incentives for Enterprises) law,” it added.
It pointed out although earnings during the first two and a half months of 2020 were not yet affected by the pandemic, profits fell sharply during the rest of the semester as Luzon and most parts of the country were placed under an enhanced community quarantine (ECQ) beginning mid-March up to mid-May to stop the spread of the coronavirus infection.
Colfinancial.com said while several areas in the country were again placed under ECQ in the second quarter of the year, mobility restrictions were not as strict and the duration was shorter compared to last year.
“Companies were also better prepared to cope with the tighter restrictions as they already had measures in place to ensure business continuity,” it said.
However, this still resulted in lower second quarter earnings sequentially compared to the first quarter for a number of companies, it added.
“Compared to expectations, the number of companies that performed above and below expectations were even at 20 or 35 percent each. Meanwhile, 17 or 30 percent performed in line with expectations,” Colfinancial.com said.
Most banks delivered higher earnings for the period with median net income growth at 28 percent. Seven reported higher year-on-year earnings: BDO Unibank Inc., Bank of the Philippine Islands, China Banking Corp., Metropolitan Bank and Trust Co., Philippine National Bank, Rizal Commercial Banking Corp. and Union Bank of the Philippines.
Two banks, EastWest Banking Corp. and Security Bank Corp., reported lower earnings.
Banks’ loan portfolio contracted by a median rate of 4.2 percent with most banks still reporting a sequential contraction in net interest margin in the second quarter, mainly driven by the faster decline in asset yield compared to funding cost.
“Trading gains also fell sharply, by a median rate of 70 percent during the first half,” Colfinancial.com said.
The property sector saw profit grow by a median of 9.3 percent, largely driven by improving revenues from residential sales. Revenues from mall leasing, office leasing and hotels were still down given the high base during the first quarter of last year, Colfinancial.com said.
“Residential revenues increased by 6.9 percent on average as construction activity continued to ramp, even with the reimposition of tighter quarantine restrictions in 2Q21.
Take-up sales also improved by 17 percent year-on-year as consumer confidence increased,” it added.
Mall revenues were down 19.2 percent year-on-year during the first half, as last year’s mall operations were normal for the most part of the first quarter. The recovery of mall operations was derailed by the reimposition of ECQ and modified ECQ in the second quarter of 2021.
Hotel revenues declined by 36.5 percent on average as travel restrictions continued to hurt demand for hotels and resorts.
“Office leasing revenues, which were largely resilient last year, fell by 2.8 percent during the first half. Average occupancy rate declined further to 88 percent as of end-June from 94 percent during the same period last year and 92 percent as of end March this year due to the departure of POGO (Philippine offshore gaming operation) tenants and the non-renewal of lease contracts by some traditional office tenants,” Colfiancial.com said.
Compared to expectations, it said Ayala Land Inc., Megaworld Corp., Filinvest Land Inc. and Vista Land and Lifescapes Inc. performed below expectations, while SM Prime Holdings Inc. was in line with expectations.
“Only Robinsons Land Corp. performed above expectations, although its outperformance was largely due to a lumpy gain from the sale of a piece of land in Bridgetown,” Colfinancial.com said.
Earnings of most consumer companies improved during the first half of the year, with 13 out of the 14 companies Colfinancial.com covers either delivered higher profits or lower losses year-on-year.
“Only two companies booked losses, down from six during the first half of last year,” it said.
Profits increased by a median rate of 59.2 percent mainly due to the low base last year as mobility restrictions peaked in the second quarter of last year.
The stockbroker said earnings of restaurants showed a significant recovery during the first semester, with all three listed restaurants turning profitable after posting losses last year.
“Sales in the second quarter jumped by a median rate of 57.3 percent compared to the second quarter last year which was the peak of the lockdown last year. Although the first half sales of Shakey’s Pizza Asia Ventures Inc. and Max’s Group Inc. were still down compared to last year, both companies already became profitable due to successful cost cutting initiatives,” it said.
“Jollibee Foods Corp. performed better than the two, with first half sales already up 13.7 percent, thanks to the strong performance of its foreign operations,” it added.
As for retail-related consumer companies, these posted sharp rebound in profit, led by home improvement stores AllHome Corp. and Wilcon Depot Inc. Both companies benefited from the shorter duration of the ECQ this year, Colfinancial.com said.
Puregold Price Club Inc., Robinsons Retail Holdings Inc. and Metro Retail Sales Group Inc. “suffered from lower revenues due to weaker sales of food and grocery items which received a boost during the first half last year amid pantry stocking,” Colfinancial.com said.
“However, even with lower revenues, Robinsons Retail and Puregold booked flat to higher profits this year as both benefited from increased supplier support. Metro Retail still booked a loss,” it said.
“SSI Group Inc. on the other hand saw a significant drop in first half losses, supported by the strong sales of its luxury segment,” it added.
Manufacturing-related consumer companies, on the other hand, posted a profit growth of 59.2 percent, with Century Pacific Food Inc. and Emperador Inc. posting “record healthy growth,” as both companies continued to benefit from higher sales and cost cutting initiatives, Colfinancial.com said.
D&L Industries Inc. and Concepcion Industrial Corp. enjoyed a rebound in profits given higher sales.
“D&L also registered a significant jump in export sales. Universal Robina Corp.’s core profits were flat as domestic sales were negatively affected by weaker spending this year and the high base last year amid pantry stocking. Profits were also weighed down by higher input costs,” Colfinancial.com said.
The power sector, posted profit growth of 61 percent. Colfinancial.com attributed the growth mainly to the rebound in Wholesale Electricity Spot Market (WESM) prices, less unplanned outages of power plants, as well as higher sales volume.
Sales volume grew 7.2 percent, driven by the 18.8 percent rise in sales volume in the second quarter.
“This was due to the low base last year as the country was placed under the strictest level of quarantine restriction for the most part of the second quarter,” Colfinancial.com said.
In the telecom sector, earnings grew by a median rate of 19.3 percent. Service revenues grew 9.5 percent led by PLDT Inc. and Converge Information and Communication Technology Solutions Inc. (Converge ICT). PLDT reported an 8.5 percent growth in service revenues while Converge ICT revenues increased 81.5 percent.
Globe Telecom Inc. posted a service revenue growth of 4.2 percent.
In the first half of the year, all three telcos saw their broadband subscriber base increase by 46.9 percent, 32.3 percent and 85.2 percent, respectively, Colfinancial.com said. – Ruelle Castro
