A study by the Philippine Stock Exchange (PSE) reveals that the income growth of listed companies continued in 2013 with their combined profits rising by 23.3% to Php163.42 billion during the first quarter of this year from Php132.54 billion in the same period a year ago. The growth was led by the retail sector, banks, construction, infrastructure and allied services, and the media. Meanwhile, total revenues of listed companies for the first three months grew by 15.4% to Php1.21 trillion from Php1.05 trillion the previous year.
“The phenomenal income performance of listed companies has been the main driver of the stock market’s growth this year while also providing a firm basis for investor optimism on the prospects for listed companies moving forward. More importantly, we believe that expansion of this magnitude should have contributed in a big way to the impressive growth rate of the economy so far this year,” Hans B. Sicat, PSE President and CEO explained.
The combined net incomes of companies in the retail business grew by 98.1% behind robust sales revenues and additional income provided by new store openings and acquisitions. Meanwhile, profits of banks rose by 97.3% during the first quarter as gains from securities trading and interest income surged. Listed firms in the construction, infrastructure and allied services sector posted combined growth profits of 70% as companies took on more infrastructure projects. The recently concluded national elections also supplied a boost to media companies’ advertising revenues, enabling their incomes to rise by 56.6% during the same period.
The increase in profits in the first quarter of 2013 follows the similarly impressive 16.6% net income growth of listed companies for the full year of 2012.
“The market may have lost ground in the past weeks, but we believe this is a result of an overreaction to global developments. There is a disconnect between good local economic fundamentals and the short term market psychology. The explanation that investors were reallocating back to developed markets is not exactly accurate, with real movements going from the equities market into cash in a period of high volatility,” Sicat said. “Looking at the bigger picture, the recent index setback is not equivalent to degrading the strong fundamentals. We believe our listed companies will remain resilient and will continue to find ways to take advantage of the favorable local macroeconomic environment.”
Other sectors which performed well include the Holding Firms, which combined profits increased by 37.8%. The Property sector also performed remarkably, with its consolidated income expanding by 24.9%.
On the other hand, the Industrial, Services and Mining & Oil sectors reported declines in their net incomes for the first quarter. The combined profits of the Industrial Sector decreased by 10.4% due in large part to lower incomes reported from power companies. Meanwhile, increased costs and operating expenses primarily caused the drop in net earnings of affected companies in the Services Sector which posted a decline in its total income by 11%.
The Mining & Oil Sector’s aggregate income continued to slide from the previous year, this time dropping by 32.6% with companies in this sector adversely affected by declining global nickel prices as well as the suspension of certain mining operations.