Philippines News: FREE

Get an edge on the Philippine Stock Market in this comprehensive tool for Filipinos and foreign investors.
Get it on Google Play

Tuesday, April 29, 2014

Consumer Sector Outlook: Consumer companies deliver mixed results

Consumer companies deliver mixed results. Performance of consumer companies was mixed in 2013 with some companies encountering challenges while overall sales growth remained robust. Among those in our coverage, PGOLD’s results fell short of expectations following a weak third quarter while EMP and PIP did not meet expectations due to lower margins. Earnings growth remained strong in 2013 with net income growing by an average of 38.4% driven by an average revenue growth of 15.0%.

Robust consumption fuels revenue growth. Consumer companies reported strong revenue growth in 2013, supported by robust domestic consumption. Top line performance of consumer companies was mostly in line or better than expectations. Only PGOLD reported revenues that were below expected largely due to fewer operating days during the rainy season in 3Q13. Growth in OFW remittances and the continuous expansion of the BPO sector continued to drive consumption. In 2013, OFW remittances reached US$22.8Bil, up by 6.4% from last year while revenues from the IT-BPO sector rose by 14.0% to US$15.5Bil.

Margins being challenged. Although the majority of companies reported expanding margins in 2013, gross margins for EMP and PIP declined versus 2012. According to EMP, weakness of the peso relative to the dollar raised procurement costs of imported materials. Note that the peso depreciated by 8.3% from Php41.00/USD in 2012 to Php44.395/USD in 2013. EMP’s gross margin decreased by 370 basis points to 32.50% while PIP’s decreased by 60 basis points to 26.5%.

- COL Financial

No comments:

Post a Comment