Metro Pacific incurs P521-M loss

Despite a P521-million loss in the first quarter, property conglomerate Metro Pacific Corp. remains optimistic of an improvement in its balance sheet over the short term due to its continued debt restructuring program and the favorable performance of its subsidiaries and affiliates.

Company spokesman David Nugent said MPC is in the middle of a transition from a diversified conglomerate to a holding firm for its core business of property development.

"Management remains razor-sharp in its focus to restructure debts and pursue other opportunities that would enhance the value of our assets," he said.

Burdened by almost P12-billion debts, MPC posted a consolidated net loss of P521 million in the first three months as a result of increased interest and financing charges.

The loss was aggravated by revenues reduced almost by half to P1.7 billion from P3 billion last year which was due to a one-time gain from a bulk sale at the Pacific Plaza Towers.

During the period, consolidated interest expense and financing charges rose from P318 million to P432 million, comprised mostly of interest costs at the holding companies MPC and Bonifacio Land Corp., which offset reductions in financing charges achieved by MPC subsidiaries.

"The increased financing costs were largely due to the restructuring of BLC’s long-term commercial paper at higher rates, and the holding companies’ discontinuing the practice of partially capitalizing interest," Nugent said.

However, he said several of MPC’s subsidiaries have shown improved performance during the first quarter, yet this was not enough to offset the slump experienced by the conglomerate’s other units.

Landco Pacific Corp. and Negros Navigation Co. reported net profits of P5.2 million and P4.9 million, respectively while Fort Bonifacio Development Corp. and Pacific Plaza towers incurred net losses of P45.5 million and P27.6 million, respectively.

First e-Bank, meanwhile, is currently in merger talks with a local bank although details cannot be divulged at the moment. MPC has received several offers for its 32-percent stake in the bank, although its financial advisor ABN-Amro is still evaluating these proposals. Among those which reportedly expressed interest in the bank are Asia United Bank, Bank of Commerce and Banco de Oro.

For Nenaco, Nugent said a significant turnaround has been achieved by the shipping line during the period, thus making it likely the company would stay in MPC’s fold over the short term.

Last year, MPC aborted its plan to unload its entire controlling stake in Nenaco even as its only other remaining non-property asset, First E-Bank, has been getting several bid offers.

In November, the company’s board decided to withdraw a June 30, 2001 proposal to dispose of its entire 74-percent interest in Nenaco by distributing these shares in the form of property dividend to MPC stockholders.

In line with its strategic focus on property development MPC has opted to divest from its remaining non-property ventures – Nenaco and 1st e-Bank – as their operations, particularly that of Nenaco, continue to weigh down on MPC’s bottomline.

In a span of more than three years, the once diversified Philippine flagship of the Hong Kong-based First Pacific group has sold off its interests in several businesses: Holland Pacific Paper Inc., Metro Bottled Water Corp., Metrolab Industries Inc., Metrovet Inc., Steniel Manufacturing Corp. and a substantial stake in PLDT.

Despite the snag in Nenaco’s disposal, Pangilinan said the board’s decision was not entirely regrettable since over the past months, Nenaco’s financial performance "has been trending towards positive territory."

In the three-month period ending March this year, Nenaco’s revenues rose modestly to P608 million from P599 million in 2001 largely due to the significant reductions in operating expenditures, manpower and interest charges.

As a result, Nenaco contributed a net income of P4.9 million, a turnaround from the net loss of P175 million a year ago.