PH corporate earnings slow to 5% growth amid high inflation

View of skyscrapers in Cebu City, home to regional headquarters of some Philippine companies. | File photo

Philippine corporate earnings grew more slowly in the first nine months of the year due to weaknesses in the consumer, property, and power sectors caused by high inflation.

According to COL Financial Group Inc.’s latest Philippine Market Strategy report, listed companies saw a 5 percent growth from January to September, a decline from 10.5% in the first quarter and 9.6 percent in the first half.

Banks were the strongest among the industries as high net interest income and trading gains drove growth.

According to COL, nearly all banks listed on the Philippine Stock Exchange booked higher profits, with growth averaging at 12.4 percent.

Demand for loans increased, buoyed by consumer and corporate loans, which were up by 17 percent and 11.7 percent, respectively.

The telecommunications sector, meanwhile, saw core earnings grow by an average of 19.1 percent on gains from the newer businesses of Globe Telecom Inc. and Converge ICT Solutions Inc.

The performance of Manuel Pangilinan-led PLDT Inc. was relatively weaker than its competitors as poor weather led to network outages.

Still, COL said these companies “all performed above expectations.”

It also pointed out, however, that strength in the banking and telco industries failed to offset the “weaker” performance of the consumer, property and power companies.

COL explained that consumer firms “delivered the worst performance” among all the publicly listed companies as high inflation during the period significantly dragged revenues.

On average, profits of these firms fell by 10.1 percent as nine out of 13 stocks covered by COL reported “below expected” earnings.

READ: Cebu’s economy continues to boom in 2023, PSA data show

Although relatively unaffected by the business cycle, earnings of the power sector also declined by 1.9 percent. This came due to lower commodity and spot market prices, COL said.

At the same time, property firms grew by 11.9 percent from 13.9 percent previously due to slower revenue growth.

“Going forward, the pace of residential revenue growth might slow down further as takeup sales contracted for the fifth quarter in a row by 14.8 percent in [the third quarter],” COL noted.

Earlier, analysts interviewed by the Inquirer explained that rate cuts were “not enough” to give the local market a much-needed boost in the third quarter due to an upside risk.

But while equities abroad are expected to be hurt by US President-elect Donald Trump’s “protectionist policies,” experts said the Philippines’ position as a US ally may become an advantage for the stock market next year. INQ