D&L on track to hit profit growth target

Food ingredient and specialty plastic additive manufacturer D&L Industries is on track to grow its recurring net income by 30 to 34 percent this year, the company’s chief finance officer said.

This will result from the company’s continued focus on higher-margin customized and specialty products, which include specialty fats and oil, as well as plastic and aerosol products, and reducing the share of low-margin refined vegetable oil to total business.

In a briefing held by BPI Securities on Saturday, D&L chief finance officer Alvin Lao said the company was “growing very fast” and has built three new plants to add capacity. By the time these plants are finished, he said utilization would be very low at 40 percent, which means that in the next few years, there would not be much capital spending required for the company.

Given recent results, he said the 30-34 percent goal of boosting recurring income this year was achievable, he said.

The goal was to increase margins by at least 1-percentage point each year, Lao said, noting this had been achieved in the last three years.

D&L, which has about 1,500 workers, is also heavy in research in development as the company has a 50-year heritage of innovation started by the first-generation founders, Lao said. “We’re coming out with more new products,” he said.

The company, which is being pitched as an indirect consumer play in the country, has 650 customers in the food business, including the biggest players in the industry. Doris C. Dumlao


PLDT mulls Google-like office


MANILA, Philippines – Philippine Long Distance Telephone Co. (PLDT) is currently considering moving its headquarters to a sprawling 2- to 5-hectare property where it could put up a new “campus type” location for its member companies.

Taking inspiration from complex-like offices in California, like “Googleplex” of search giant Google Inc., the PLDT group is currently finalizing project details, including costs and construction timetable, according to the telco president and CEO Napoleon Nazareno.

This option came up after the group decided not to push through with the acquisition of businessman Roberto Ongpin’s Alphaland Building along Ayala Avenue in Makati City.

READ: Alphaland in talks to sell Makati office building

The Googleplex-like proposal was among the options considered when the telco officials and its property group were assessing whether to rent or acquire new property to house the group’s revenue generating operations and save up to P90 million in rent.

READ: PLDT H1 profit grows 2% to P19.7-B

PLDT is currently headquartered at the company’s Ramon C. Cojuangco (RCB) Building and the Makati General Office (MGO) in Makati City but a migration plan is in the drawing board.

The new location may be financed by proceeds from its other properties.

READ: PLDT plans sale of idle properties

Among those considered for disposal are the 3-hectare property in Dansalan in Mandaluyong City, the old traffic office along España in Sampaloc in Manila, as well as a lot in Filinvest Corporate Center in Alabang in Muntinlupa City.

It may also sell the warehouse of defunct Pilipino Telephone Corp. (Piltel) in Sta. Rosa in Laguna, as well as the PLDT Garnet exchange building in Ortigas Center in Pasig City. – Rappler.com


Reaction to Fed move likely ‘less exaggerated’

A US FEDERAL Reserve tapering has been priced in by financial markets, which are expected to subsequently react in a “less exaggerated manner.”

“I believe many markets, if not all markets, have factored in the possible action on the part of the Fed,” central bank Deputy Governor Diwa C. Guinigundo said.

“What is uncertain is only the timing and pacing of the reduction.”

The Federal Open Market Committee — the policy-setting body of the US central bank — will be meeting from Sept. 17-18 and analysts expect it to finally announce a reduction in its $85-billion monthly bond-buying program.

Hints in May of a likely end to quantitative easing spooked investors and led to market plunges worldwide, repeated anew in June following statements by Fed chief Ben Bernanke.

The tapering’s actual timing and pace is still unknown, however, and this has led to continued capital flight from emerging markets.

The Philippines has not been spared, with the peso and stock market hitting multi-year lows, although observers believe that strong fundamentals will allow the economy to escape the worst of the volatility.

Mr. Guinigundo pointed out that with the Fed having telegraphed its move, policy makers and fund managers “should have prepared already in terms of monetary policy and for the market, their portfolio decision.”

The Bangko Sentral ng Pilipinas’ (BSP) policy-setting Monetary Board last week decided to keep overnight borrowing and lending rates at record lows of 3.5% and 5.5%, respectively, noting that inflation remained benign amid better-than-expected economic growth.

Central bank Governor Amando M. Tetangco, Jr. has said that keeping policy settings “steady” will allow the BSP to assess brewing risks.

For her part, National Treasurer Rosalia V. de Leon said, “We are in a position of strength because we have always been mindful of the impact once quantitative easing is reduced.”

“Our fundamentals are strong not because of [capital] inflows, but because of reforms institutionalized by the government and these are the pull factors,” she said in a text message.

“We have a spare tire given improving revenues, abundant liquidity and comfortable cash buffer we have built,” Ms. de Leon added.

“We have seen government securities’ rates inching up, but that is expected. However, inflation remains within target so rates should not increase significantly.”

Asked if government borrowing plans would be revised given the prospect of higher interest rates, Ms. de Leon replied that next year’s program could be moved up to the first quarter.

Philippine Stock Exchange president Hans B. Sicat, meanwhile, said volatility would continue even if investors “seem to understand the situation.”

“[T]here are a lot of other factors which are pushing and pulling markets [such as] the extent of the tapering, [who will be the new] Fed chairman, geopolitics, China and ASEAN-(Association of Southeast Asian Nations) related issues,” he said.

Deanno J. Basas, ATR KimEng Asset Management investment director, said: “If the Fed starts to taper [this] week, a big part of the adjustment has been priced in already.”

“Probably, market players will react, markets will move, but in a less exaggerated manner compared to what we saw in May and June when all gains in the stock market were wiped out and the peso touched multi-year lows.”

Given the expected increase in interest rates, First Metro Investment Corp. (FMIC) President Roberto Juanchito T. Dispo, said more companies are expected to “lock in borrowing cost while rates are still low.”

He said that for FMIC, “the runway is full so to speak; we have live mandates from seven corporates, which will raise funding from local capital markets between now and the end of the year.”

He declined to be more specific with regard to the firms looking to tap the debt market, only adding: “They are from the property, power, consumer and utility sectors. There will also be a holding company.” — A. R. R. Gregorio

Asia stocks edge up as Syria worries diminish









BANGKOK — Asian stock markets posted modest gains Thursday as the risk of U.S. military intervention in Syria appeared to diminish.

Diplomatic efforts to get Syria to turn over its stockpile of chemical weapons went into high gear Wednesday, easing fears that the U.S. would launch an attack. Washington has threatened to retaliate against Syrian President Bashar Assad for allegedly using chemical weapons against civilians outside Damascus last month.

President Barack Obama contends that chemical attacks pose a potential threat to the global community and retaliation is necessary. But he has faced an uphill battle trying to convince congressional leaders and U.S. allies to go along.

Hong Kong’s Hang Seng rose 0.4 percent to 23,019.37. South Korea’s Kospi advanced 0.5 percent to 2,013.70. Australia’s S&P/ASX 200 gained 0.3 percent to 5,247.70. But Japan’s Nikkei 225 index fell 0.3 percent to 14,382.92. A firmer yen hurt export shares.

On Friday, investors will be closely monitoring U.S. retail sales data for August as they gear up for next week’s policy meeting of the Federal Reserve.

Over recent weeks, the markets have priced in the likelihood that the Fed will start to reduce its monetary stimulus at the meeting. The main question for most traders is how much the current $85 billion of monthly asset purchases will be reduced.

On Wall Street, stocks mostly rose Wednesday as investors continued to bet that a U.S.-Syria military conflict may not happen. The Standard & Poor’s 500 index posted its seventh gain in a row after starting the day with a loss. The Nasdaq composite posted a small loss. Both indexes were held back by a decline in shares of Apple and other tech companies.

The Dow Jones industrial average rose 0.9 percent to close at 15,326.60. The Standard & Poor’s 500 index rose 0.3 percent, to 1,689.13. The Nasdaq composite fell 0.1 percent, to 3,725.01.

Benchmark oil for October delivery rose 6 cents to $107.61 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 17 cents to close at $107.56 a barrel on the Nymex on Wednesday.

In currencies, the euro rose $1.3320 from $1.3312 late Wednesday. The dollar fell to 99.50 yen from 99.87 yen.

Inflation slows to 2.1% in August

INFLATION continued to decelerate in August, the National Statistics Office (NSO) reported this morning, due to declines in housing and utility rates.

Prices inched up by 2.1% last month, the lowest since August 2009, pulling down the year-to-date inflation rate to 2.8%.

Inflation came in at 2.5% in July and 3.8% in August the year before.

The latest inflation results open room for more easing by the Bangko Sentral ng Pilipinas, which has set an inflation target of 3-5% for this year.

In a statement, NSO said it had noted a decrease in the housing, water, electricity, gas and other fuels index.

“Contributing also to the downtrend were the slower annual increments in the indices of food and non-alcoholic beverages; alcoholic beverages and tobacco; clothing and footwear; furnishing, household equipment and routine maintenance of the house; and transport,” it said.

Population gains need FDI boost

By Bettina Faye V. RocReporter



THE PHILIPPINES must improve its ability to attract investments to take advantage of its favorable demographic, according to Bank of America — Merrill Lynch (BofA).

In a report, “Asia in Focus: Demographic Divide and Peaks”, BofA said that based on the United Nations’ (UN) latest population estimates, the demographic divide among Asian countries over the next decade will become more stark, which could have implications on the region’s economy.

“The UN revisions bring forward the demographic peaks of several countries in terms of working-age population, including China (2015), Thailand (2017), Malaysia (2047) and India (2050); while deferring the peaks of Indonesia (2058) and Philippines (2085),” the bank noted.

“The next decade for Asia will therefore be very different from previous decades when most of Asia was still experiencing demographic dividends, including China and Korea,” it said.

The bank said that based on the demographic peaks noted by the UN, labor forces of the majority of Asian countries will likely shrink significantly over the next decade.

“This will have important implications on GDP (gross domestic product) growth, consumer spending and asset prices, judging from Japan’s experience,” it said.

The Philippines’ demographics, though, look encouraging, BofA noted, as its peak — projected by the UN to be reached in 2085 — remains far off. This means that the population remains young, with more people expected to enter the labor force in the coming years.

“Demographic peaks will be the most favorable and distant for the Philippines (2085), Indonesia (2058), India (2050) and Malaysia (2047),” it said.

“Philippines, Malaysia, Indonesia and Singapore — in that order — will likely see the strongest labor force growth in Asia over the next decade,” BofA said.

Meanwhile, Thailand — whose demographic is seen to peak in 2017 — is emerging as the “old man” among Southeast Asian economies, the bank noted, and will see its working age population shrink, along with those of Japan, Hong Kong, Korea and China.

“Still, Philippines, Indonesia and India have struggled to attract FDI (foreign direct investments) despite their resource advantage,” stressed BofA.

Thus, there is much room for improvement, it said, as Asia continues to rebalance its economy.

“This is the opportune time for the Philippines, Indonesia and India if the governments can capitalize on their abundant labor resource and lower labor costs to attract greater foreign direct investment,” the bank said.

“Barriers to foreign investments however remain daunting. The outcome has been more an outflow of workers and talent to a growing diaspora outside their borders, rather than investments flowing in,” it said.

This is especially important as production, consumption, and investment patterns across Asia continue to change amid the availability of labor, BofA noted.

According to data from the Bureau of Labor and Employment Statistics, the country’s labor force as of April stood at 40.905 million, up 0.6% annually from 40.645 million in the same month in 2012. The labor force participation rate stood at 63.9% as of the same month this year, slightly lower than the year-ago rate of 64.7%.

Meanwhile, net FDI inflows stood at $1.522 billion as of May, lower than the $1.666 billion recorded in the comparable 2012 period, based on Bangko Sentral ng Pilipinas (BSP) data.

Dollar slips, yen climbs amid Syrian conflict

POSTED ON 08/28/2013 9:49 AM  | UPDATED 08/28/2013 9:57 AM

18NEW YORK CITY, USA – The dollar fell Tuesday, August 27, against other major currencies while the yen jumped amid rising tensions over Syria.

Financial markets were in turmoil from growing expectations of imminent Western military action against Syria for its alleged use of chemical weapons against civilians.

US forces readied to strike Syria as the West insisted its goal was not regime change but to punish President Bashar al-Assad’s government for attacking civilians with chemical weapons.

“The possibility of a military strike on the country is growing by the minute and investors are worried that it could destabilize the region,” said Kathy Lien of BK Asset Management.

The foreign exchange market was choppy, with the dollar losing ground against the euro late in the trading session.

Read: European stocks slip on rising Syrian crisis

Around 2100 GMT, the euro bought $1.3391, up slightly from $1.3369 at the same time Monday.

The Japanese yen benefited as investors rushed for shelter in the traditionally safe-haven currency from the geopolitical uncertainty.

The dollar fell to 97.01 yen from 98.51 yen late Monday, while the euro dropped to 129.88 yen from 131.68.

“Concerns over tension in Syria and potential for Fed tapering seem to be the main underlying themes driving the foreign exchange markets. The yen is higher, however, as money continues to flow out of emerging markets and into other currencies seen as safer places for investment,” said Zachary Griffiths at Wells Fargo Economics.

Griffiths pointed to bearish equity markets and predicted the greenback would likely gain as capital flows away from riskier assets.

The dollar fell to 0.9173 Swiss franc from 0.9230 franc late Monday.

The British pound slipped to $1.5542 from $1.5572. – Rappler.com