Benpres net income soars on IPO gains

BY RUBY ANNE M. RUBIO, BusinessWorld Senior Reporter The favorable Supreme Court ruling on Manila Electric Co.’s (Meralco) tariff case and gains from the market debut of First Gen Corp. (First Gen) pushed Benpres Holdings Corp.’s net income by 305.26% last year. Benpres’ net income in 2006 was P4.62 billion from P1.14 billion in 2005. In a regulatory filing, the flagship company of the Lopez family said net income attributable to equity holders rose 475.55% to P4.21 billion from P732 million. Without these gains recorded by First Holdings, Benpres’ net income attributable to equity holders would have been P2.2 billion. On Wednesday, Benpres shares closed 1.36 lower at P3.65. Analysts told BusinessWorld they were bullish about the company that was incorporated in 1993 by the Lopez family. "The company’s performance last year is a [positive] sign. The planned backdoor of tollways through City Resources Corp. will add to Benpres earnings while Meralco’s recovery will likewise benefit them," said PCCI Securities Brokers Corp. Phils. President Francisco Liboro. Early this month, the board of directors of First Holdings approved the transfer of its shares in First Philippine Infrastructure Development Corp. to listed City Resources Corp. in exchange for shares of common stock. City Resources is the holding company for the tollroads and infrastructure business of First Holdings and Benpres Holdings Corp. After the planned transfer of shares, City Resources will become a majority-owned subsidiary of First Holdings and the parent company of First Philippine Infrastructure Development Corp. An analyst from a foreign brokerage house, who asked not to be named, said, "The financial performance looks OK. The next step for them is to conclude debt restructuring." Last year, Benpres made semiannual interest payments on its direct and contingent obligations that are covered in its proposed balance sheet management plan. Benpres had $360 million and P2 billion in direct and contingent obligations last year, unchanged from principal debt as of 2005. It said it would continue to negotiate a debt restructuring with its creditors. The Lopez-led firm posted 2% growth in revenues to P17.39 million from P17.05 million coming from airtime, sales and services and license fees. ABS-CBN Broadcasting Corp. turned in P10.67 million in airtime revenues, up 3.29% from P10.33 million. Its combined sale of services and goods improved by 10% to P5.61 million from P5.09 million as international content distribution arm ABS-CBN Global saw a 21% growth in its subscriber base. Benpres trimmed its expenses by 26% to P12.12 million from P16.4 million. Foreign exchange gains amounted to P920 million, rising by 76% from P522 million in 2005 as the peso appreciated against the dollar in 2006. The dollar-peso exchange rate closed the year at P49.03 per dollar from P53.09 at the end of 2005 and P56.28 at the end of 2004. First Holdings recognized a P2.65-billion gain on dilution from its reduced interest in First Gen following its initial public offering in February 2006. Power distributor Meralco posted a turnaround of P13.88 billion in 2006 from a restated net loss of P207 million previously. A statement from Benpres noted how "[Meralco] reversed provisions for probable losses earlier made in the event of a final and executory adverse decision on its unbundling case before the Supreme Court." In December 2006, the high court overturned the Court of Appeals decision nullifying unbundled tariffs allowed by the Energy Regulatory Commission in 2003. Manila North Tollways Corp., which rehabilitated, expanded and operates the North Luzon Expressway, said gross revenues grew 12% to P5.8 billion. Bayan Telecommunications, Inc.’s revenues expanded by almost 10% to P7.57 billion from P6.89 billion. It earned P974 million, reversing its net loss of P541 million the previous year.