IF foreigners base on profitability their choice of listed stocks in which to invest their dollars, then they would probably place Ayala Corp. (AC) at the top of their list.
It is consistent profitability that enabled AC to pile up surplus of P92.37 billion as of September 30, 2013. Filipino investors similarly measure companies by their audited financial reports and find the Zobel-controlled AC being among the more reliable.
Incidentally, AC happened to be one of the seven holding companies listed on the Philippine Stock Exchange included in Due Diligencer’s choices. If the previous piece took up their retained earnings as of September 30, 2013, this one would show how they have accumulated their surpluses.
If you were to look at the nine-month financial performance of said seven listed companies, their combined profits totaled P144.46 billion, up 0.52 percent from P143.71 billion in the same period in 2012. These resulted from revenues which increased 5.98 percent to P989.14 billion from P933.30 billion. Of the seven, Philippine Long Distance Telephone Co. (PLDT) and SM Investment Corp. (SMIC) were the biggest profit makers. PLDT reported profit of P28.99 billion, up 2.22 percent, or P630 million from P28.36 billion, and SMIC, P26.30 billion, up 14.45 percent, or P3.32 billion from P22.98 billion.
However, Alliance Global Group Inc. (AGI) and AC registered the biggest profit increases. AGI had a nine-month net profit of P19.16 billion, up a huge 42.35 percent, or P5.70 billion from P13.46 billion, while AC’s net income surged 24.92 percent, equivalent to P3.75 billion in peso term, to P18.80 billion from P15.05 billion in the same period in 2012.
Of the seven, three reported smaller but billion-profit increases in the first three quarters of 2013. San Miguel Corp.’s net income dropped 31.21 percent, or P8.02 billion to P17.68 billion from P25.70 billion, while that of JG Summit Holdings Inc. of businessman John Gokongwei Jr. declined 13.97 percent, or P2.126 billion to P13.30 billion from P15.46 billion. Aboitiz Equity Inc., on the other hand, reported a net profit of P20.23 billion, down 10.88 percent, or P2.37 billion from P22.70 billion.
The numbers shown in the table should tell us consumers where our money went in 2012 and 2013, and how much more those who could well afford to buy their products spent last year. But these companies never told us how they made more revenues last year than in 2012. Could it be because they charged us more for the same products they sold us? That is, the price increases generated more money, which meant bigger profits and more dividends for their stockholders. Was it also possible that they produced more and sold more in 2013 but at 2012 prices? This, of course, would be impossible. Business operates for profits. The more money it makes, the better.
As the total shows, the seven of 40 or so listed holding companies needed only P10.86 billion for their combined revenues to hit a trillion, an amount which you and I would have difficulty counting. Yet, we would well understand how much P989.14 billion should mean to big business that had it so good in 2012 and 2013: the more revenues that we contribute to their cash registers the bigger their profits that would accrue to retained earnings, which, in turn, would be distributed as dividend either in cash or in stock.