First Pacific firms mourn loss of Salim Group patriarch

MANILA, Philippines - Indonesian tycoon Liem Sioe Liong, the acknowledged patriarch of the Salim Group which controls Hongkong-based PLDT parent First Pacific Co., has passed away.

First Pacific managing director and chief executive officer Manuel V. Pangilinan confirmed in a text message that Liem who was also known as Soedoeno Solim, passed away Sunday at 3:08 p.m. in Singapore, after a long illness. He was 95.

Pangilinan also gave assurances that Liem’s death will have no effect on First Pacific or on any of its operations in Hong Kong and elsewhere, including the Philippines.

“While he remains the acknowledged patriarch of the group – the quintessential Mandarin guru – Liem Sioe Liong has long retired from any active involvement with the group’s activities and plans. We pray that he finds peaceful and eternal rest after a long and distinguished life, which started as a young immigrant from (China’s) Fujian province, settling first at Kudus, central Java, supporting family and relatives with his first job – coffee trading,” Pangilinan told The STAR.

As of March 20, 2012, First Pacific’s economic interest in telecommunications leader Philippine Long Distance Telephone Co. (PLDT) is 25.6 percent; in Metro Pacific Investments Corp. (MPIC), 59.1 percent; in Indonesia-based Indofood, 50.1 percent; and in Philex Mining Corp. 31.3 percent. Two Rivers Pacific Holdings Corp., a Philippine affiliate of First Pacific, holds an additional 15 percent interest in Philex, First Pacific’s website revealed.

First Pacific chairman and Liem’s son Anthoni Salim said 2012 may well be a year of taking a step back in order to leap forward in the coming years for the First Pacific Group.

“PLDT is focusing on integrating Digitel and Sun Cellular as it builds out a 4G-ready network in its cellular business and a Next Generation Network in its fixed-line operations. Its information technology platform is being upgraded with the goal of making permanent reductions in operating costs and capital expenditures while raising margins. Earnings will be down slightly at PLDT in 2012 but they are nevertheless likely to be their third-best ever, before returning to growth after a year,” he said.

Salim also noted that Philex had its best year ever in 2011 but now faces a likelihood of declining ore grades at its Padcal mine.

“We are hopeful that Philex will make up for any decline in production by acquiring an ongoing or brownfield mining operation so it can deliver an immediate increase in gold and copper output before its Silangan mining project comes online in a few years’ time,” he emphasized.

He also noted that after an extremely strong year at MPIC, “we are likewise hopeful of making new investments, perhaps in the toll road space, or in rail or airport redevelopment.”

“Its current toll road, water distribution, electricity distribution and healthcare businesses all expect healthy growth in 2012 but the significant growth at MPIC will come from acquisitions,” Salim added.

He likewise revealed that with careful management of existing operations and the possibility of value-enhancing new investments, “we are confident that 2012 will bring exciting and rewarding developments for our shareholders.”

For his part, Pangilinan said that First Pacific’s two largest investments, PLDT and Indofood, saw their 2011 financial performance held back by increasing competition.

“While Indofood can expect continuing growth in sales and earnings in 2012, PLDT will see a year of alignment as it continues to integrate Digitel and Sun Cellular into its operations, and finalizes a major capital expenditure program to modernize its networks and information technology. The goal is to bring permanent reductions in operating expenses and future capital expenditures. Eventually, these efforts will place PLDT back on an upward earnings growth curve starting 2013,” he said.

He also disclosed that MPIC will continue investing in infrastructure as it builds on a 2011 best-ever performance, driven by the water and electricity distribution businesses. “Areas of potential investment include toll roads, railways, airports, and water distribution outside our existing franchise area. It is our belief that the participation in public-private partnerships in infrastructure development will bring strong returns on investment while delivering improvements the country badly needs,” Pangilinan stressed.

As for Philex, he noted that 2011 ore production was the highest in 25 years, and coupled with historic high gold prices, the company turned in its best financial performance ever, and rewarded shareholders with a dividend payout of approximately 50%.

Pangilinan revealed that in 2012, First Pacific’s investment priorities will be in the fields of infrastructure and natural resources in emerging Asia. “We expect steady economic growth in Asia over the medium term. We are sanguine about the need in our markets for new infrastructure and raw materials in the years ahead. We expect 2012 to be a more demanding year but we are confident in the soundness of our assets and the skill of our management teams to bring out the best in our businesses,” he told First Pacific shareholders.