Stock News 2013: PAL won’t be folded into LT Group

PAL Express (Photo credit: Wikipedia)

Flagship carrier Philippine Airlines (PAL) will no longer be consolidated into the listed umbrella firm of beer and tobacco magnate Lucio Tan as it focuses on being a consumer-related conglomerate.

“We’re not putting it in. PAL will not be part of the LT Group. It’s part of the family holdings but not the LT Group,” Michael G. Tan, president of LT Group, told reporters.

Tan said PAL as an aviation company is different from the basket of consumer-related businesses held by LT Group.

“Essentially, we are focused on being a consumer firm,” said LT Group chief financial officer Jose Gabriel D. Olives.

In October, LT Group’s board of directors approved the deferment of the acquisition of the aviation unit. Concerns were raised over the negative effect of loss-making PAL in LT Group’s books.

LT Group, formerly Tanduay Holdings Inc., earlier planned to acquire 49.84 percent and 50.97 percent of Philippine Airlines Inc. and Air Philippines Corp. (now PAL Express), respectively.

Tan said PAL will not be consolidated into the conglomerate even it if becomes profitable already.

In the nine months of its fiscal year ending March 2012, the airline’s parent firm PAL Holdings Inc. trimmed its losses by 24 percent to P2.74 billion compared with P3.59 billion as total revenues climbed by 2.4 percent to P55.68 billion from P54.38 billion on the back of higher revenues from its passenger and cargo businesses.

PAL, which is 49-percent owned by diversified conglomerate San Miguel Corp., is embarking an expansion program as it plans to further widen its global footprint to include the Middle East, Europe and Australia. It plans to acquire up to 100 brand new aircraft in line with its bid to reclaim the top slot in the local airline sector.

The decision not to include PAL in the listed holding firm was finalized last year, Olives said.

LT Group, which completed its consolidation program last year, is into beer (Asia Brewery Inc.), distillery (Tanduay Distillers Inc.), real estate (Eton Properties Philippines Inc.), banking (Philippine National Bank) and tobacco (PMFTC Inc.).

Moving forward, LT Group expects to continue being a beneficiary of strong consumer spending.

“I would think in the next couple of years it will be like that,” Olives said.

“We should obviously take advantage and grow our businesses in the consumer segment,” Olives said, adding that its units will offer new products to increase its market reach.

LT Group grew its profits by a third to P3.8 billion in the first quarter. Revenues picked up 14 percent to P17.7 billion “due to higher revenues from banking, distilled spirits and property development, which offset the revenue drop in the beverage and tobacco sectors,” LT Group said.

http://www.philstar.com/business/2013/06/03/949392/pal-wont-be-folded-lt-group

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Stock News 2013: PAL plans to build Philippines’ biggest airport

English: Photo of the Centennial terminal area at the Ninoy Aquino International Airport. (Photo credit: Wikipedia)

Shortly after signing a multibillion-dollar deal to acquire 50 new planes—the biggest aircraft order in the country’s history—flag carrier Philippine Airlines (PAL) on Thursday disclosed plans to build what could be the largest airport in the Philippines.

The planned airport would be able to handle four times as many flights per hour as the congested Ninoy Aquino International Airport (Naia) in Pasay City. Naia, built in the 1950s, has been criticized as obsolete with decrepit facilities. It can handle 36 flights per hour.

PAL president Ramon S. Ang said investments in infrastructure was part of the company’s aggressive expansion program, which could include rehiring some of the 2,600 employees PAL retrenched in October of last year.

“We have a plan for our own terminal and runway. We still have to clear this with the government but we are hoping they will support us,” Ang told reporters at the sidelines of the firm’s annual shareholders’ meeting.

He said the new airport would be closer to Manila than the Clark International Airport in Pampanga, which the government is grooming to replace Naia.

Ang, who also serves as president of PAL’s controlling shareholder San Miguel Corp., declined to disclose the prospective location for the new facility, but said the company would need at least 2,000 hectares of land for the project.

The new airport, which will be exclusive to PAL and sister firm PAL Express (formerly Air Philippines), would have two parallel runways when it opens, with the option of having two more. Parallel runways mean two planes can take off and land at the same time—now impossible at Naia’s perpendicular runways.

Ang said the government’s plan to turn Clark into the country’s premier gateway might be ill-advised, given the facility’s distance from Manila. “If you want to fly [from] Clark, how long will it take you to get to the airport? Two hours if you are coming from Makati. Then you have to wait two more hours for your flight,” Ang said.

He said plans to build a new high-speed railway between Metro Manila and Clark—at an estimated cost of $10 billion—would be too heavy a burden for the government to carry.

Ang said the company would shell out about $500 million in equity for the airport project. The rest of the project cost would be financed using loans from foreign or local banks.

Once approved by the government, he said PAL could complete the project in three years. “We plan to pitch this to President Aquino in January or February. Hopefully, this is aligned with the government’s plans,” he said.

http://business.inquirer.net/79584/pal-plans-to-build-philippines-biggest-airport

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Stock News 2013: San Miguel sets $35-B investment plan

English: Bottle and can of beer San-Miguel selling in the Philippines (Photo credit: Wikipedia)

San Miguel Corp. will focus on growing the businesses currently in its portfolio over the medium term in a move that will involve aggregate investments of about $35 billion, according to the head of the diversified conglomerate.

More importantly, many of the big-ticket projects – especially in the infrastructure sphere – were slated to be completed before the end of President Aquino’s term in 2016, SMC president Ramon Ang said.

“Many of our expansion plans for our projects will be completed by 2014 or 2015,” Ang said, replying to questions e-mailed by the Inquirer. “Before 2016, we will have completed our investments in two new power plants, our [planned] airport project, the Petron [refinery] expansion, our mining investments and the toll roads.”

San Miguel has been on an acquisition spree in recent years when it acquired the country’s biggest petroleum refiner and distributor Petron Corp., flag carrier Philippine Airlines and a slew of toll road concessions, among others—part of 35 deals worth $7 billion over the last decade.

One company that will benefit from an aggressive expansion program is PAL, where San Miguel holds a 49-percent stake along with management control, while the Lucio Tan group holds 51 percent.

“Our total investments planned for PAL will be around $10 billion,” Ang said, explaining that most of this would be in the form of new aircraft.

“This year, we will concentrate on the expansion of [PAL],” he said. “With the arrival of new aircraft, PAL will, for sure, be very competitive against any airline in the world.”

Eighteen aircraft are slated for delivery this year, starting in August. These include eight Airbus A330s, with a capacity of 418 passengers each; two Boeing B777-300ERs for its long-range services, and eight Airbus A321s, each capable of carrying 202 passengers in a two-class configuration.

“So 2013 will be a big year for PAL,” said Ang, who also serves as the airline’s president. “PAL is very promising.”

He added that the positive impact on the airline’s financial statements would be felt once the efficiencies of the more fuel-efficient aircraft have been factored in, although he said he believed that it would remain “cash flow-positive” this year and next.

If the government approves San Miguel’s proposal to build a new international airport, Ang said the total investments into the project would easily contribute another $10 billion to the economy.

He said the conglomerate has identified a “Korean partner” for the project and was just waiting for the government’s green light for the private undertaking. He declined to disclose whether the proposed four-runway international airport would be located to the north or south of Metro Manila—a precaution, he said, to prevent land speculation that would push up acquisition costs for the 2,000 hectares needed for the project.

On the power sector, Ang outlined plans for San Miguel to build an additional 3,000 megawatts of capacity all over the country.

“We will start building [the power plants] this year,” he said. “Right now, we have two sites: one in Bataan for 600 MW and another 600 MW in Davao del Sur. In the next few months, we will identify the remaining other sites that will complete the 3,000 MW.”

Both plants will be powered by clean coal technology, called “circulating fluidized bed boilers.”

The additional 3,000 MW of generation capacity would involve investments worth $6 billion, he said.

This year, San Miguel would also concentrate on building its portfolio of toll way projects, Ang said. In particular, he wanted the Tarlac-Pangasinan-La Union Expressway (TPLEx) to eventually extend to Laoag, Ilocos Norte.

http://business.inquirer.net/105677/san-miguel-sets-35-b-investment-plan

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Stock News 2012: SMC income jumps 31% to P14.1 B in H1

PAL's third logo was applied to aircraft during the 1970s, in concurrent use with the second one. The typeface used here was later applied to the second logo. (Photo credit: Wikipedia)
Diversified conglomerate San Miguel Corp. (SMC) jacked up its net income 31 percent in the first half to P14.1 billion, powered by strong performance across most of its businesses.

In a financial report released yesterday, SMC said its revenues grew 25 percent to P329.5 billion although operating income slid 20 percent to P25.1 billion on increased prices of crude oil and raw materials.

Despite the rise in input costs for some of its businesses, SMC chairman and chief executive officer Eduardo M. Cojuangco Jr. said the group’s highly-diversified portfolio provided fresh growth drivers that allowed them to deliver good results.

“Our first semester financial results provide a glimpse of the importance of a diversified portfolio and the continuing value of our core businesses to the overall stability of the group,” Cojuangco said.

Consolidated recurring earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to P38.4 billion.

Flagship firm San Miguel Brewery Inc. turned in revenues of P36.9 billion, four percent higher than a year ago, with the brewery’s international operations registering double-digit revenue growth as a result of higher volumes in Hong Kong, Indonesia and Thailand. Consolidated operating income rose six percent to P10.8 billion.

Hard liquor unit Ginebra San Miguel Inc., on the other hand, reported a 12 percent drop in revenues to P7.2 billion as sales volumes declined by 15 percent to 11.7 million cases.   As a result, it recorded an operating loss of P157 million.

San Miguel Pure Foods Co. Inc. continued its upward traction with net sales improving seven percent to P45.3 billion on strong showing of the agro-industrial cluster, value-added meats and milling segments.

Higher raw material prices and limited supply of cassava in the earlier part of the year weighed down on its operating income, which was at P1.9 billion in the first semester. However, the second quarter improvements in the pork and chicken supply-demand scenario and raw material prices almost doubled its operating income to P1.2 billion from P659 million in the first quarter.

Meanwhile, revenues from the San Miguel Packaging Group slightly decreased to P11.9 billion, weighed down by the lingering global economic crisis. Operating income, however, improved five percent to P1.1 billion.

With better utilization of all plants and increased demand from bilateral customers, SMC Global Power’s consolidated net revenues went by 11 percent to P39.5 billion, resulting in a 17 percent rise in operating income to P8.8 billion.

Its net generation volume for the first semester reached 8,081 gigawatt hours, up 12 percent.

Net earnings of its major sales contributor, Petron Corp., slid 93 percent to P432 million due to the volatility in global oil markets and the consolidation of its Malaysian operations. It completed the purchase of Esso Malaysia Bhd. in March.   Excluding the second-quarter loss of the Malaysian business, Petron posted a net profit of almost P2 billion in the first semester.

The oil industry saw a steep and continuous decline in crude and finished product prices from April to the first week of July, which resulted in 13 weeks of consecutive price rollbacks in local pump prices. Margins also narrowed as higher cost inventory were sold at lower prices. But while margins were contracting, Petron’s total domestic sales expanded nine percent 21.81 million barrels.

In other businesses, SMC said its infrastructure projects are progressing as planned and it expects revenues to come in by the first quarter of 2013.

Philippine Airlines (PAL) also recently took delivery of its third long-haul Boeing 777-300 ER. PAL has also started implementing its new growth strategy that includes the modernization of its fleet, the expansion of its network, and improvements in passenger service. Looking forward, the airline has several initiatives in place aimed at increasing profits by generating revenue growth and controlling costs.

“Across the San Miguel Group, we will be working hard to harness potential synergies from recent acquisitions and new businesses so that markets can be developed, revenue streams can be increased, costs can be reduced, and efficiency improved,” Cojuangco said.

http://www.philstar.com/Article.aspx?publicationSubCategoryId=66&articleId=837747

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Stock News 2012: Meralco says customers to see lower bills

GMA Network, Inc. (Photo credit: Wikipedia)
San Miguel Corp. (SMC) is betting big on the airline space with plans to invest in a regional carrier in line with its goal to double annual revenues to P1 trillion in the next few years through expansion beyond its traditional food and drink business.

At the company’s annual stockholders meeting yesterday, SMC president Ramon S. Ang said the conglomerate is looking at several airlines in the region as it further builds up its position in faster-growing and high potential industries such as power, mining, infrastructure, travel and possibly, broadcasting.

“We’re looking at several opportunities that will allow us to create synergy within the airline sector.

We’re planning to invest in a regional airline, a move that will allow us to eventually fly to Europe and other countries,” said Ang, who was credited by management for steering SMC to greater heights.

SMC acquired a substantial stake in flag carrier Philippine Airlines in April in a deal worth around $500 million. The conglomerate plans to support PAL’s fleet modernization and expansion program.

Ang said PAL is now in talks with aircraft manufacturers to acquire at least 100 new planes in the next five to seven years in line with its bid to turn around Asia’s oldest airline in two years. To achieve its goal, the company is seeking to restructure its operations to a low-cost carrier.

He said the group is also seriously considering breaking into the broadcasting industry but declined to give more details, pointing out they are open to participating in government auctions to spur faster growth. Ang earlier said they are open to acquiring state-owned stations IBC 13 and RPN-9.

When asked whether GMA Network Inc. is on its radar, Ang said: “We’d rather not comment. We’d like to keep things confidential.”

The group of telecommunications magnate Manuel V. Pangilinan earlier expressed interest to acquire GMA, which is keeping its options open with respect to the possibility of putting it up for sale.

SMC chairman and chief executive officer Eduardo Cojuangco Jr. said that while the group’s P1-trillion sales target may be ambitious, this can be done through further acquisitions, pointing out that the group’s infrastructure projects will begin generating significant growth by 2015.

“From the period 2011 to 2015, we expect San Miguel to post strong double-digit compounded annual growth rate, driven primarily by the earnings contributions from our new businesses, mainly power and Petron,” Cojuangco said.

In 2011 alone, consolidated sales revenues reached P536 billion, more than double the previous year’s P246 billion.

New businesses contributed over P345 billion or an estimated 63 percent of the groupwide sales last year.

Expected to contribute significantly to SMC’s bottomline are investments in Exxon Mobil’s downstream oil business in Malaysia and its stake in the firms operating Skyway and South Luzon Expressway.

http://www.philstar.com/Article.aspx?publicationSubCategoryId=66&articleId=817225

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Stock News 2012: SMC boosts Meralco stake to 32.39%

Meralco (Photo credit: Wikipedia)
San Miguel Corp. concluded yesterday the purchase of 62.99 million shares of Manila Electric Co. from the Social Security System, effectively increasing its indirect ownership in the power utility giant to 32.39 percent.

In a disclosure to the Philippine Stock Exchange yesterday, San Miguel said the shares were crossed via a special block in favor of unit SMC Global Power Holdings Corp. at P90 each share or a total of P5.67 billion. The transaction was in pursuant to an agreement signed by Global 5000 Investment and the state pension fund in January 2009.

The shares represent around 5.6 percent of Meralco’s outstanding capital stock.

Meralco closed at P243 yesterday, 3.6 percent lower than Monday’s close of P246.60.

Global 5000 took center stage in 2008 when it purchased Meralco shares as a voting ally of San Miguel. Its major shareholders are businessmen Iñigo Zobel, former Trade Minister Roberto Ongpin and condiments king Joselito Campos, all key players behind Top Frontier Holdings Inc., the dominant voting bloc in San Miguel.

The group of telecommunications magnate Manuel V. Pangilinan, through Beacon Asset Holdings Inc., holds a controlling stake in Meralco at 48.02 percent.

Global 5000 paid P1.133 billion to SSS as downpayment, with the balance paid out in three tranches.

The state pension fund sold the shares when the market price then was at P59.5 per share, for a hefty P1.92-billion premium.

Meanwhile, San Miguel disclosed that it was contemplating on selling Series 2 preferred shares but did not indicate how much it was planning to raise from the fund-raising activity.

San Miguel said its board approved the issuance of 1.1 billion Series 2 preferred shares with a par value of P5. Also approved was an increase in the conglomerate’s authorized capital from P22.5 billion to P30 billion, divided into 3.79 billion common shares.

Based on its filing with securities regulators, the Series 2 preferred shares shall be issued in tranches as the board may determine.

San Miguel, one of the largest companies in the country in terms of market capitalization, invested at least $3 billion since 2007 to move away from its traditional food and drinks businesses and venture intofaster-growing sectors such as power, fuel and oil, telecom, mining, banking, property development and infrastructure. It recently added airlines into its business portfolio with the acquisition of a 49 percent stake in Trustmark Holdings Corp. and Zuma Holdings & Management Corp., the holding companies of flag carrier Philippine Airlines and its sister budget airline Air Philippines Corp., respectively.

http://www.philstar.com/Article.aspx?articleId=816932&publicationSubCategoryId=66

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Stock News 2012: PAL, AirPhil set refleeting programs

Philippine Airlines, which recently took in the San Miguel Corp as a new investor, is seen investing as much as $1 billion for a fleet modernization program that will make the storied flag carrier more competitive.

Ramon S. Ang, president of SMC who signed a deal last week to acquire 49 percent each of PAL Holdings and Air Philippines Corp., said the conglomerate welcomed “the opportunity to participate in the refleeting and modernization plans of the two airlines.”

In a text message, Ang said the fleet modernization would cost at least $500 million to as much as $1 billion.

The $500-million minimum requirement is what SMC is infusing into several holding firms that will result in its equity investment in PAL and AirPhil, where the conglomerate is expected to exercise management control even if the majority stake would remain with the group of taipan Lucio Tan.

In a statement jointly issued by the Lucio Tan group and SMC, the two groups said the new partnership would “allow the two airlines to strengthen operations and stay competitive with the implementation of PAL and AirPhil’s fleet modernization program.”

Industry sources explained that because SMC’s entry into PAL and AirPhil would involve the issuance of new shares, new money would flow into the carriers. For capital spending beyond $500 million, the source said the airlines could fund this through debt rather than equity so as not to disrupt the existing capital structure.

http://business.inquirer.net/52951/pal-airphil-set-refleeting-programs

Stock News 2011: Cebu Pacific buys 37 Airbus jets

Image via Wikipedia
Budget carrier Cebu Pacific announced Thursday it had ordered 37 new Airbus jets worth $3.8 billion as part of its ambitious plans to expand operations across the Asia Pacific.

Cebu Pacific chief executive Lance Gokongwei told a news conference his company had ordered 30 Airbus A321neo jets and seven A320 aircraft, to be delivered between 2015 and 2021.

He said the airline also had another option for 10 more A321neo jets, which can carry more people and fly longer distances than the A320s that currently dominate Cebu Pacific’s fleet.

“These 220-seater aircraft will be a game changer for Cebu Pacific,” Gokongwei said.

“We will be able to serve cities in Australia, India and northern Japan, places the A320 cannot reach.”

Cebu Pacific is already the number one airline in the Philippines in terms of passenger numbers, having expanded rapidly in recent years to overtake national carrier Philippine Airlines.

http://business.inquirer.net/4368/cebu-pacific-buys-37-airbus-jets-worth-3-8b

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Stock News 2010: PAL to save P141M on cabin crew cutback

Image by antefixus21 via Flickr

MANILA, Philippines—The flight stewards union of the Philippine Airlines on Friday said the flag carrier would reap more than P141 million in savings for cutting down the number of cabin crew members per aircraft, an amount bigger than the financial package it was offering to flight attendants.

In a statement, the Flight Attendants and Stewards' Association of the Philippines claimed that the reduction program was being implemented "at the expense" of flight attendants now working double-time due to the small number of crew members serving per aircraft.

"The reductions scheme takes away food on the flight attendants' table, making them work more for less pay," said Fasap president Bob Anduiza in a statement Friday.

The program was enforced starting July despite strong objections from FASAP, he noted.

Citing documents detailing PAL's plans to reduce Cabin Crew Complement per aircraft type, FASAP on Friday said such scheme would result to a "whopping" P141,306,729.17 savings yearly for the national carrier.

"[This figure] is certainly several times bigger than the financial amount PAL is offering to the 1,542 flight attendants to cover for a three-year Collective Bargaining Agreement," said Anduiza.

http://newsinfo.inquirer.net/breakingnews/nation/view/20100924-294138/PAL-to-save-P141M-on-cabin-crew-cutbackFasap

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