Benpres income plunges 83% to P368 M

The Lopez-owned Benpres Holdings Corp. (BPC) suffered a huge drop in profit last year as losses of its subsidiaries – Bayan Telecommunication Holdings Corp. (Bayan Tel) and Maynilad Water Services – weighed heavily on the parent company’s bottom line.

In a disclosure to the Securities and Exchange Commission, BPC said its net income fell 83 percent from P2.208 billion in 1999 to only P368 million last year. Revenues, meanwhile, dropped 36 percent to P3.867 billion due to lower gains from its divestments which reached P2.07 billion last year, from P3.975 billion in 1999.

Although a number of its subsidiaries, in particular flagship broadcast station ABS-CBN Broadcasting Corp., posted respectable gains, BPC said its balance sheet was affected by the overall weakness in the domestic economy, unstable foreign exchange rates, rising interest rates, and a changing regulatory landscape that adversely affected the company’s operations as well as some of its investments.

The company cited the volatile foreign exchange rate, which fell from an average of P40.45 to $1 in January 2000 to P49.92 to $1 in December 2000, and the rise in the bellwether 91-day Treasury Bill rate from an average of 8.91 percent to 13.61 percent.

"Combined with the political uncertainty during the fourth quarter of 2000, the rise in borrowing costs in both foreign and local funds proved detrimental," BPC said.

Its telecom arm, 46 percent-owned Bayan Tel, was a major casualty as its debt woes dragged its losses to P3.29 billion. Moreover, Bayan Tel’s subscriber base dropped 12 percent to 222,676 by end 2000.

The unstable foreign exchange rate, meanwhile, proved detrimental to the operations of Maynilad Water, which is still seeking an automatic currency exchange rate adjustment (CERA) in its tariffs to recover previous losses due to currency fluctuations and to ensure financing of the water project concession with the Manila Waterworks and Sewerage System (MWSS).

The MWSS had agreed "in principle" to the implementation of the CERA last January but this was put on hold and jeopardized the closing of a $350-million project financing package.

However, BPC’s other subsidiaries fared well, led by ABS-CBN with a 13 percent growth in income of P2.261 billion and energy arm First Philippine Holdings doubling its net profit to P1.1 billion.