Hong Kong, 30th March, 2016 - First Pacific Company Limited (HKSE: 00142) ("First Pacific" or the "Company") today reported its audited financial results for the year ended 31st December 2015, showing a rise in net profit notwithstanding difficult trading conditions.
First Pacific, a leading investment management and holding company focused on the economies of emerging Asia, is a major or controlling shareholder in the Philippines' biggest/leading telecommunications, infrastructure and mining companies and in Indonesia's biggest vertically-integrated food company as well as in one of Australia's and New Zealand's biggest food companies.
Under trading conditions marked by intense competition, unfavorable currency movements and weakened commodity prices, net profit rose 5% to US$85.1 million from US$81.0 million owing to lower write-downs on investments. Turnover declined 6% to US$6.44 billion from US$6.84 billion largely as a result of much weaker regional currencies. The Indonesian rupiah was down 12% during 2015 from its average exchange rate a year earlier; the Philippine peso fell 3% in the year.
Total contribution from operations fell 6% to US$432.9 million from US$462.7 million, pulled down primarily by PT Indofood Sukses Makmur Tbk ("Indofood") on rupiah weakness, and Philippine Long Distance Telephone Company ("PLDT"), hurt by competitive market conditions. Stronger results from Metro Pacific Investments Corporation ("MPIC") and a first-ever contribution from Goodman Fielder headquartered in Australia mitigated these shortfalls. Recurring profit fell 9% to US$293.9 million from US$323.9 million a year earlier on lower contribution from operations, and slightly higher interest expense, partly offset by lower other expenses.
In local currency terms, MPIC recorded its highest-ever earnings in 2015.
"Difficult market conditions at PLDT which resulted in lower profitability, and the adverse impact to Indofood from exchange rate and commodity price weaknesses were the main factors in our weakened performance in 2015," said Manuel V. Pangilinan, Managing Director and Chief Executive Officer of First Pacific.
"As a result, we consider it prudent to conserve resources and meet our commitment to a minimum payout ratio of 25% by declaring a final dividend of 5.5 HK cents per share," he said. "This will reduce our full-year dividend to 13.5 HK cents in 2015 from 21.0 HK cents in 2014."
In U.S. dollar terms, the final dividend recommended by First Pacific's Board amounts to 0.71 U.S. cents per share, and brings the full-year regular dividend to 1.74 U.S. cents versus 2.70 U.S. cents in 2014.
First Pacific maintains a dividend policy of distributing dividends amounting to no less than 25% of recurring profit. In 2015, shares repurchased from the market and canceled amounted to US$19 million, or 6% of recurring profit. Together with the dividend payout, total cash returns to shareholders in 2015 amounted to 31% of recurring profit.
PLDT saw its contribution decline to US$180.7 million from US$195.7 million a year earlier while Indofood's contribution fell 18% to US$130.3 million from US$158.4 million as a weaker rupiah reduced the U.S. dollar value of its rupiah-denominated income in 2015.
Contribution growth came from MPIC and Goodman Fielder. MPIC delivered the strongest growth in operating unit contribution, rising 11% to US$118.2 million from US$106.6 million. Goodman Fielder made its first-ever contribution, US$13.3 million, following its March 2015 takeover by a 50:50 joint venture between First Pacific and Wilmar International Ltd.
Philex Mining Corporation ("Philex") saw its contribution fall 52% to US$4.9 million from US$10.2 million as lower metal prices and lower sale volume cut into its earnings. The negative contribution from FPM Power, the holding company for PacificLight Power Pte. Ltd., Singapore's newest power plant, fell to US$10.7 million from US$12.0 million. FP Natural Resources, the holding company for sugar and coconut investments in the Philippines, swung to a negative contribution of US$3.8 million from a positive contribution of US$1.6 million in 2014 on reduced supplies of sugar cane and start-up losses from its coconut operations.
First Pacific collected US$269 million in dividend and fee income from its operating companies in 2015, down from the US$304 million received in 2014 mainly due to currency weakness.
Foreign exchange losses increased significantly to US$48.5 million in 2015 from US$9.3 million in 2014.
Non-recurring losses in First Pacific's full-year earnings fell sharply to US$158.6 million from US$234.3 million in 2014 principally reflecting the lower amount of impairment provision for the Group's investments in Philex. This accounted for the increase in net profit to US$85.1 million from US$81.0 million.
At 31st December 2015, gross debt at the Head Office stood at US$1.8 billion. Fixed-rate debt made up 82% of the total, with floating-rate debt making up the remaining 18%. First Pacific's blended interest cost amounted to 5.3% and the average maturity of its debt was 4.2 years. The next major debt maturity will take place in July 2017 with the maturity of a seven-year US$300 million bond.
Further details of earnings by First Pacific's subsidiary and associated companies follow.
REVIEW OF OPERATIONS
PLDT reported a 6% decline in core income last year to ₱35.2 billion from ₱37.4 billion in 2014 owing mainly to lower cellular service revenues due to intense competition, higher compensation and employee benefits expense and financing costs, partly offset by lower provision for income tax and higher fixed line service revenues.
More details are available at www.pldt.com.
Indofood reported a 10% decline in core income to Rp3.6 trillion from Rp3.9 trillion a year earlier on currency weakness, lower average selling prices by its Agribusiness and Bogasari flour and pasta divisions, partly offset by higher average selling prices at the Noodles division.
More details are available at www.indofood.com.
MPIC reported a 22% increase in core income to ₱10.3 billion from ₱8.5 billion in 2014 as each of its four main businesses delivered strong growth in spite of regulatory challenges.
More details are available at www.mpic.com.ph.
Philex reported a 19% decline in core income to ₱905 million from ₱1.12 billion in 2014 on lower metal prices.
More details are available at www.philexmining.com.ph.
Goodman Fielder reported its first-ever contribution of US$13.3 million to the Company.
More details are available at www.goodmanfielder.com.au.
OUTLOOK
Despite a difficult 2015, the First Pacific Group looks to the future with optimism.
PLDT will continue to focus on its digital pivot into a data-intensive, multi-media business. This will entail continuing investment in data infrastructure and internet and media-related assets and content. Its Core Income has been guided to decline as a result to ₱28.0 billion in 2016.
Indofood's strong sales growth in recent years is expected to continue in 2016, although market growth will continue to face challenges from increasing competition in most market segments.
MPIC faces some difficulty in forecasting its 2016 earnings because of continuing regulatory uncertainty. However, continuing strong growth in most of its main businesses bode well for its core earnings even as it seeks further investments in infrastructure. MPIC's performance is being helped by a strong Philippine economy.
Philex continues to work on a definitive feasibility study for its significant Silangan gold and copper mining project in Mindanao, while additional resources have been discovered in the existing Padcal mine, whose mine life has been extended to 2022. Discovery of further resources in the region would further extend Padcal's mine life.
First Pacific Chief Executive Pangilinan concluded:
Further information and analysis
Attached to this news release are:
More details about the earnings of First Pacific and of its operating companies can be found on www.firstpacific.com under the Investor Relations tab. The 2015 Annual Report will be posted to the website and to shareholders before the end of April 2016.
Corporate Profile
First Pacific is a Hong Kong-based investment management and holding company with operations located in Asia-Pacific. The Company's principal businesses are in consumer food products, infrastructure, natural resources and telecommunications. First Pacific is listed in Hong Kong (HKSE: 00142) and its shares are also available in the United States through American Depositary Receipts (ADR code: FPAFY). For further information, visit www.firstpacific.com.
For further information, please contact:
| John Ryan | Tel: (852) 2842 4355 |
| Head of Investor Relations | Mobile: (852) 6336 1411 |
| Executive Vice President | |
| Group Corporate Communications | |
| Sara Cheung | Tel: (852) 2842 4336 |
| Vice President | |
| Group Corporate Communications | |
For more information, please visit http://doc.irasia.com/listco/hk/firstpacific/annual/2015/respress.pdf.
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