Aboitiz Group bullish on CCBPI business despite higher sugar tax

By Jenniffer B. Austria

By Julito G. Rada

Finance

Secretary Benjamin Diokno said over the weekend the Philippines returned to the path of an “A” investment-grade rating after showing resilience during the COVID-19 pandemic.

Diokno expressed confidence the sovereign credit rating would reach the ‘A’ level by the end of the term of President Ferdinand Marcos Jr. despite the challenging global environment.

“We are firmly back on the road to ‘A’ and we hope to achieve this objec-

In Brief

Volatile stock trading expected this week

PHILIPPINE stocks may see volatile trading this week, after the previous week’s massive sell-off, analysts said over the weekend. They said that while share prices might rebound Monday after Friday’s steep decline, investors’ focus would likely be on the release of important economic data and corporate earnings later this week.

“The sell-off last Friday induced mainly by institutional trades for the PSEi rebalancing, could prompt an index rebound on Monday,” China Bank Corp. managing director Juan Paolo Colet said. Colet said activity for the rest of the week would be driven by the release of second-quarter gross domestic product and US July inflation prints, corporate earnings and the MSCI index review announcement.

“The market will likely remain mired in its multi-month range with major resistance at 6,700 to 6750 and support at 6,370-6400,” Colet said.

Rizal Commercial Banking Corp. economist

Michael Ricafort said the recent depreciation of the peso against the dollar and the downward correction in the US stock markets were adding to investors’ worries.

The bellwether Philippine Stock Exchange index plunged by 174 points, or 2.63 percent, last week as investors shrugged off the further easing of local inflation rate and positive corporate earnings. Jenniffer B. Austria

DOF sees inflation hitting target by Q4

THE government expects that its intensified measures to rein in inflation will help ensure it will be within the target range by the fourth quarter of 2023, Finance Secretary Benjamin Diokno said over the weekend.

The Economic Development Group held its second session recently in a Joint EDG and Inter-Agency Committee on Inflation and Market Outlook.

“It discussed the continuous implementation and the intensification of measures to monitor prices and the demand- and supply-side risks in both food and non-food commodities in view of safeguarding the Filipino people’s purchasing power against potential inflationary impacts of weather and external-related uncertainties, the impending El Nino, and transportation and wage hike petitions,” Diokno said.

Diokno said to ensure food security, particularly in rice, the government would intensify the proper utilization of the calamity fund and quick response fund to help farmers.

The government will also expedite the implementation of measures to mitigate the impact of El Niño as discussed by the National El Niño Team to ensure food security. These include the provision of production inputs such as early maturing/short gestation/ drought tolerant seed and planting materials), adjustment of the cropping calendars, construction or installation of rainwater harvesting structures and small scale irrigation systems, and distribution of pump and engine sets, among others. Julito G. Rada

URC’s income rose 19% to P3.28b in Q2

FOOD manufacturer Universal Robina Corp. said net income attributable to parent equity holder rose 19 percent in the second quarter of 2023 to P3.28 billion from P2.72 billion in the same period last year as margins expanded despite higher commodity costs.

URC said in a financial report filed with the Philippine Stock Exchange the continued resilient consumer demand across the region pushed second-quarter consolidated revenues to P38.8 billion, up 10 percent from a year ago.

Operating income in the second quarter jumped 17.8 percent to P3.9 billion as the company saw the full year impact of the price adjustments made by the company in 2022.

“We are pleased that the company has maintained its sales momentum while showing improving margins against last year, despite higher input costs and inflationary pressures,” URC president and chief executive Irwin Lee said.

“The company will continue to prioritize profitable growth on the back of our strong brands and consistent operating discipline. No matter the external environment, URC takes pride in continuously delighting consumers with good food choices,” he said.

First-half net income also grew by 7.4 percent to P6.66 billion from P6.2 billion a year ago, while consolidated sales jumped 11 percent to P78.6 billion. Jenniffer B. Austria tive by the end of this administration in 2028,” Diokno said.

He said in a statement an upgrade to “A” rating would result in improved perception of the local and international business and financial communities to the country and help reduce the govern-

“In turn, this will increase investments due to higher investor’s confidence and will eventually help in achieving the country in its long-term economic plans,” Diokno said.

The “Road to A” is the Philippine government’s program to achieve an investor-grade sovereign credit rating of ‘A’ from international rating agencies. These include the “Big 3” agencies—Moody’s Investor Service, Fitch Ratings and S&P Global Ratings—as well as Japanese raters R&I and the Japan Credit Rating Agency.

An A rating would affirm the Phil- ippines’ creditworthiness and would serve as a strong signal to local and international business and financial communities that the country is conducive to long-term investments.

The Philippines has a “BBB+” sovereign credit rating from S&P Global. This is one notch below the minimum ‘A’ rating target of the government.

Fitch in May 2023 affirmed its “BBB” rating and simultaneously revised its outlook from negative to stable in view of their improved confidence in the Philippines’ strong medium-term growth after the pandemic and sustained reductions in government debt-to-GDP.

ABOITIZ Equity Ventures remains positive about the prospects of soft drink maker Coco-Cola Beverages Philippines Inc. which it plans to invest in despite the government’s proposal to increase taxes on sugary drinks, an executive said.

AEV senior vice president and chief finance officer Jose Emmanuel Hilado said during the company’s third-quarter investors briefing the higher taxes would affect sales only on the short term as consumers would eventually adjust to higher prices. Eventual sales are expected to go back, he said.

This was the experience of CocaCola Europacific Partners and other bottlers, according to Hilado.

“The experience of CCEP shows that you will get hit initially. There could be a drop in sales of 10 to 15 percent, but amazingly, this kind of market adjusts eventually. In matter of 6 to 12 months your sales go back. It gets affected, but goes back where it is,” Hilado said.

AEV announced last week that it teamed up with CCEP to acquire 100-percent stake in CCBI. CCEP will have 60 percent stake, while AEV will own 40 percent.

Hilado said AEV planned to raise debt to partially fund the acquisition.

“The business [is] resilient, so if you are a mid-term to long-term investor in this kind of business, [it] should not deter you from doing this business,” he said.

The Department of Finance disclosed plans to increase the sweetened beverage tax rate to P12 per liter, regardless of the type of sweetener used.

It proposed that the excise tax rate on sugary beverages be indexed annually by 4 percent, with exemptions eliminated to broaden the tax base.

ASIALINK’S AWARDS. Asialink Finance Corp. is recognized the Philippines’ financing company of the year at the Asian Banking and Finance Awards in Singapore in recognition of its commitment to financial inclusion. Asialink chair Ruben Lugtu (center) receives the award from Tim Charlton (left) chief executive of Charlton Media Group. With them is Gabriel Doromal, Asialink marketing officer. The company also received the ‘SME Financial Inclusion Initiative of the Year” award which highlights its efforts to empower micro, small and medium enterprises in the Philippines.