Conglomerates set higher budget for capex

MANILA, Philippines — The country’s biggest conglomerates are setting aside higher capital expenditures (capex) this year compared to 2021, a reflection of their growing confidence in the economy’s recovery, according to First Metro Investments Corp. (FMIC).

It cited Ayala Corp., which allotted a capex of P285 billion, higher than the P228 billion allocation for 2021, or an increase of 25 percent.

Another Ayala-led company, Ayala Land Inc., also announced a higher capex of P90 billion this year from P64 billion in 2021, an increase of 40 percent.

Meanwhile, Pangilinan-led Metro Pacific Investments Corp. more than doubled its capex to P136 billion this year from P59 billion in 2021, up 130 percent.

Cebu-based Aboitiz Equity Ventures likewise earmarked a higher capital spending budget for the year at P69 billion compared to P27 billion in 2021, up 155 percent, while Andrew Tan’s conglomerate Alliance Global Group Inc. also announced a capex of P60 billion for this year, 33 percent higher than the P45 billion a year ago.

Jollibee Foods Corp., the Filipino-owned global food giant, also pumped up its capex for the year by 125 percent to P18 billion from just P8 billion a year ago as it plans to continuously expand its network across the globe.

The Razon Group’s International Container Terminal Services Inc. also more than doubled its capex to P18 billion from P8 billion in 2021, also an increase of 125 percent.

On the other hand, Pangilinan-led telco giant PLDT announced a P76 billion to P80 billion capex for 2022 compared to an P89 billion capex in 2021, down 10 percent.

Another conglomerate, JG Summit Holdings also reduced its capex for 2022 – albeit slightly – to P42 billion this year from P46 billion in 2021, a decline of nine percent.

The data was presented by FMIC head of research Cristina Ulang in a press briefing last week.

Ulang said corporations continue to show progress despite the challenging business environment, with most growing their first quarter earnings by 10 percent.

She said despite the prevailing headwinds affecting the stock market, there are upside drivers, including the recent peaceful election, the new administration’s plan to continue reforms, the Bangko Sentral ng Pilipinas’ rate hikes to temper inflation, and the BSP’s pro-growth stance.

Other pillars of growth, she said, include new opportunities in Asia such as trade diversion due to the US-China rivalry and the relatively cheaper valuation in emerging markets compared to developed markets.