Cosco Capital net income up 157%

MANILA, Philippines - Cosco Capital Inc., the investment holding firm of retail tycoon Lucio Co, nearly tripled its earnings in the first half driven by the solid performance of its flagship, Puregold Price Club Inc.

In a regulatory filing, Cosco Capital reported a 157-percent spike in earnings to P2.36 billion in the first half from P920 million a year ago.

Total revenues jumped 44 percent to P35.07 billion from P24.4 billion in the same period last year while cost of sales rose at a slower pace of 39 percent to P28.46 billion, the company said.

Cosco Capital attributed the sales growth to strong revenue growth in the business segments, with turnover of the retail business growing P9.74 billion, real estate at P550 million, liquor at P440 million and oil storage at P100 million.

“The increase was generally attributable to newly opened stores and acquisitions for retail business, sales volume growth for liquor business and newly completed properties for lease for real estate business,” Cosco Capital said.

The retail businesses accounted for 60 percent of net income, followed by real estate at 21 percent, liquor distribution at 12 percent, and oil storage and mining at seven percent.

In particular, the retail business, primarily through Puregold, grew its profits 72 percent to P1.78 billion from P1.03 billion.

“This was contributed by the significant increase in sales as a result of additional operating stores this year, improved gross profit due to higher level of suppliers’ support and overall management effort,” Cosco Capital said.

In the first half, the company opened 21 new Puregold and S&R stores. It also acquired Company E Corp.’s 15 branches. As of end-June, Puregold has 192 stores with a net selling area of more than 330,000 square meters.

For its part, the real estate business recorded a 172-percent increase in net income to P874 million.

“The increase was attributable to the newly constructed buildings that started operations in the last quarter of 2012 including those located in Batangas, Cavite, Subic and building 2 in Divisoria 999,” Cosco Capital said.

The liquor distribution business also posted higher sales, which expanded 45 percent to P1.4 billion. Sales volume increased given a new tax regime that allowed the company to import and sell more to current distributors, Cosco Capital said.

Oil storage unit Pure Petroleum Corp., which just started operations in November, reported P102 million in revenues and P94 million in operating income.

However, mining revenues sank 58 percent to P1 million “due mainly to the decrease in the share in revenue received from SC-14 B1 (North Matinloc),” Cosco Capital said.

Cosco Capital is planning to conduct a $500-million sale of existing and new shares that will increase its public float and beef up liquidity.

Cosco Capital, formerly Alcorn Gold Resources Corp., earlier announced that it needs P12 billion (around $293 million) to take advantage of growth opportunities and pay existing debts.

The Co family injected into Cosco Capital its 51-percent stake in Puregold and a portfolio of liquor distribution companies, commercial real estate firms and an oil storage business.