FirstPac's Salim upbeat on RP investments

MANILA, Philippines - The chairman of Hong Kong-based conglomerate First Pacific Co. (FPC) believes that while its subsidiary Philippine Long Distance Telephone Co. (PLDT) will have to remain vigilant in light of competitive pressures and tightening margins, the strength of its management and marketing in particular should see a consistent performance in 2010.

“While PLDT’s traditional business grew at a modest rate, we are seeing very strong growth in its data and broadband businesses, in which the company with its extensive network is very well positioned to exploit. Consequently, PLDT was able to make a dividend payment of 100 percent out of its core earnings,” First Pacific chairman Anthoni Salim said.

First Pacific has a 26.5 percent economic interest in PLDT, a 55.6 percent interest in MPIC, and 31.4 percent in Philex Mining (Two Rivers Pacific Holdings Corp., a Philippine affiliate of First Pacific holds another 15.1 percent interest in Philex).

In First Pacific’s 2009 annual report, Salim noted that he is pleased to note that they are beginning to see good growth in their recent investments. “I am increasingly confident that once the development plans for these investments have been completed, their value will be enhanced.

All our businesses have performed well in a challenging and volatile year. It is a credit to the breadth of our portfolio that we are able to report our fifth consecutive year of improved earnings,” he said.

Salim also pointed out that MPIC’s performance in 2009 showed immense improvement, with its water business showing further progress in potable water being delivered to more customers, and higher billed volume as a result of the diligent rollout of its capital expenditure program.

He said the marketing initiatives for the tollroad business have also been applied with considerable focus and average daily traffic volume increasing to over 150,000 vehicles. “This positions the business extremely well as tollways expansions are planned for the next few years,” he emphasized.

Salim added that with the recent consolidation of MPIC’s interest in the Manila Electric Co. (Meralco), with that of Pilipino Telephone Inc. (Piltel), in Beacon Electric Asset Holdings, “I have the firm belief that we will see the Meralco’s performance improve above the rise of its earnings this year.”

He stressed that MPIC has a formidable portfolio of infrastructure businesses and with the additional management that is being recruited to reinforce the existing core, he is confident they will see further significant growth in earnings and value in 2010.

For his part, First Pacific managing director and CEO Manuel V. Pangilinan noted that despite a rather unsettled year in the aftermath of the Wall Street collapse in late 2008, First Pacific was able to report another historic high recurring profit for 2009.

“All businesses within our portfolio either improved their performance over the previous year, or raised their contribution to First Pacific – in either case, benefitting our results for the entire year,” he said.

Pangilinan pointed out that PLDT recorded its seventh consecutive year of historic high core net income equivalent to P41.1 billion while MPIC’s expanded portfolio of businesses resulted in a 4.9 times growth in core net income of P2.05 billion.

He said that PLDT will continue to deliver more data and ICT services across its many networks.

PLDT officials said they view 2010 with guarded optimism, with growth expected to come from broadband, fixed line revenues from corporate and SME markets, and improvements in its business process outsourcing business.

“However, the cellular business faces challenges given the high market penetration, the market’s increasing preference for unlimited offers and multiple SIM ownership, as well as competition from social networking and broadband. With the expected softness in revenues, PLDT is looking to control cash operating expenses in order to maintain profit growth,” they added.

Meanwhile, Philex increased its contribution to First Pacific as metal prices recovered during the year and managed various production and milling challenges that were faced.