Hong Kong, 27th March, 2024 – First Pacific Company Limited (HKSE: 00142) ("First Pacific" or the "Company") today reported its audited financial results for the year ended 31st December 2023, showing record highs for turnover, contribution, recurring profit, and dividend income owing to record-setting performances by all of its four core holdings. In a signal of the Company's health, First Pacific's Board of Directors increased the final distribution to shareholders by 9%.
First Pacific is a leading investment holding company focused on the economies of emerging Asia and is a major or controlling shareholder in Indonesia's biggest vertically integrated food company and in the Philippines' leading telecommunications, infrastructure, and mining companies as well as Singapore's sole LNG-fired power plant.
"While they are important in themselves, we regard the financial performances of our disparate holdings in Southeast Asia as foundations for further earnings growth in the years ahead," said Manuel V. Pangilinan, Managing Director and Chief Executive Officer of First Pacific. "At the same time, we are making strategic initiatives aimed at diversifying and strengthening the growth potential of the First Pacific Group, particularly in our core markets of Indonesia and the Philippines."
First Pacific's 2023 full-year results saw turnover rise 2% to a record high US$10.5 billion from US$10.3 billion a year earlier. Total contribution from operations increased 18% to a highest-ever US$701.5 million versus US$593.3 million in 2022, driven by strong increases in contribution from Metro Pacific Investments Corp. ("MPIC"), PacificLight Power Pte. Ltd. ("PLP"), PT Indofood Sukses Makmur Tbk ("Indofood"), and PLDT Inc. ("PLDT").
"MPIC is worthy of particular notice in these results," said Pangilinan. "Having delisted the Philippines' biggest infrastructure holding company in the fourth quarter of last year, we can report that not only did MPIC deliver record high earnings, it also provided more than half of the increase in contribution from our investments in 2023 to the record high we are reporting today. We fully expect that MPIC's value as a privately held asset will only increase in the months and years ahead."
Recurring profit rose 19% to a third consecutive year of record high US$603.8 million from US$508.8 million in 2022 as overall Head Office costs rose 16% to US$97.7 million from US$84.5 million principally due to an increase in net interest expense.
In 2023, the Company reported net profit of US$501.2 million, up 28% from US$391.6 million in 2022.
"As a sign of our continuing confidence in the outlook for the First Pacific Group over the medium term, the Board of First Pacific has declared a final distribution of 12.5 HK cents per share, up from 11.5 HK cents per share last year," Pangilinan said. "This will increase our full-year distribution to 23.0 HK cents in 2023, up 5% from 22.0 HK cents in 2022." At First Pacific's current share price, the full-year distribution amounts to a yield of approximately 6.0%.
In U.S. dollar terms, the final distribution recommended by First Pacific's Board amounts to 1.60 U.S. cents per share and brings the full-year distribution to 2.95 U.S. cents versus 2.82 U.S. cents a year earlier. Recurring basic earnings per share rose 19% to 14.24 U.S. cents in 2023 versus 11.96 U.S. cents a year earlier.
The contribution from MPIC rose 53% to a highest-ever US$159.8 million from US$104.4 million as economic activity continued its recovery with the easing of community quarantine policies imposed amid the COVID-19 pandemic and long-delayed tariff increases in major businesses began to be implemented. All three of MPIC's main businesses – electricity distribution, toll roads, and water supply – saw higher volumes in 2023 than a year earlier.
The contribution from PLP rose 44% to a record high US$118.8 million from US$82.4 million on higher blended non-fuel margins and higher electricity sales. During the year, PLP sharply reduced its borrowings.
Indofood, the world's largest maker of wheat instant noodles and the biggest food company listed in Indonesia, saw its contribution rise 7% to a record high US$285.1 million versus US$265.8 million a year earlier on surging sales growth in its Noodles and Distribution businesses.
The contribution from PLDT, the largest telecommunications services provider in the Philippines, increased 7% to US$143.2 million from US$133.7 million as revenue growth in all three main businesses – Individual, Home, and Enterprise – offset higher costs even as net service revenues rose 1% to a record high 191.4 billion Philippine pesos. After spending US$1 billion or more on capital expenditures in every year since 2015, PLDT is seeing its customers respond with explosive growth in demand for data services ranging from home Wi-Fi to mobile streaming and to cloud services and data centers.
For its part, Philex saw its contribution decline 43% to US$7.6 million from US$13.4 million in 2022 as lower ore volumes offset higher gold prices. Development of its Silangan gold and copper mining project in Mindanao continues, aiming for launch of operations in 2025.
First Pacific Head Office recorded foreign exchange gains of US$0.9 million, versus losses of US$8.8 million a year earlier, while invested companies recorded foreign exchange gains of US$18.6 million versus losses of US$88.7 million a year earlier, mainly because of appreciation of the Indonesian rupiah and Philippine peso.
In 2023, First Pacific received a record high US$324.1 million in dividend and fee income from the companies it is invested in, up 43% from US$225.9 million received in 2022, led by PLP, PLDT, Indofood, and MPIC.
At 31st December 2023, gross debt at the Head Office was approximately US$1.5 billion, little changed from a year earlier, with cash on hand of US$71 million. Fixed-rate debt made up 49% of the total, with floating-rate debt making up the remaining 51%. First Pacific's blended interest cost amounted to 5.4%, up from 4.8% a year earlier, and the average maturity of its debt was 3.2 years versus 2.8 years at the end of 2022. At year-end 2023, the Company's interest coverage ratio stood at 4.4 times versus 4.0 times a year earlier. As part of the proactive liability management initiatives, Head Office has obtained committed banking facilities to refinance the US$210 million outstanding bank loans due in 2024.
OUTLOOK
"All our four core holdings are running strong, and I have every expectation that as a group they will improve upon their record-setting performances of 2023 with even better results in 2024," Pangilinan said. "The medium-term outlook is such that we are confident in amending our distribution/dividend policy to a commitment to deliver a progressive dividend policy over time. The aim of this policy is to steadily increase or at least maintain the Hong Kong dollar value of dividends per share annually."
However, he added, "Prospective dividends remain dependent on the financial performance and funding needs of the Company. That said, we can be confident in the outlook going forward, building on the solid footing of medium-term earnings growth in our mix of listed and private assets, and the implication that has for shareholder returns over time."
Further details of earnings by First Pacific's subsidiary and associated companies follow.
REVIEW OF OPERATIONS
Indofood reported an 8% increase in core income to a record high Rp9.8 trillion from Rp9.1 trillion a year earlier largely as a result of strong sales growth led by the Consumer Branded Products and Distribution businesses, with both reaching record highs. EBIT margins remained strong, with Consumer Branded Products business EBIT margin increased to 21.5% in 2023 from 19.0% a year earlier and the overall Indofood EBIT margin at 17.6% vs. 17.8% in 2022.
More details are available at www.indofood.com.
PLDT reported Telco core profit rose 4% to ₱34.3 billion on record high EBITDA and lower depreciation, offset by higher financing costs and income tax provision as service revenues climbed to a record high ₱201.8 billion with all three main businesses delivering increases. Service revenues and EBITDA are seen reaching consecutive record highs in 2024 on mid-single-digit growth while 2024 full-year telco core profit is seen reaching at least ₱35 billion as capital expenditures continue their downward trend to a range of ₱75-78 billion vs. ₱85.1 billion in 2023.
Maya Innovations Holdings Pte. Ltd., the leading digital banking platform in the Philippines and a 38%-owned associate of PLDT, reported full-year losses down to ₱2.2 billion vs. ₱3.2 billion in 2022 and forecast that it is on course to break even by 4th quarter 2024. The number of bank depositors more than doubled in 2023 while deposit balances rose 1.7 times and cumulative loans disbursed soared by 6.9 times.
More details are available at www.pldt.com.
MPIC reported that its core profit rose 38% in 2023 to a highest-ever ₱19.5 billion vs. ₱14.2 billion in 2022 as contribution from investee companies rose 29% to a record high ₱24.5 billion vs. ₱18.9 billion on contribution growth led by the power and water businesses. Earnings growth is seen continuing in the double digits in 2024.
PLP reported core profit rose 37% to a record high S$394.9 million vs. S$287.8 million on higher blended non-fuel margins as revenue rose 13% to a highest-ever S$2.7 billion vs. S$2.4 billion on the strength of higher sales volumes. Electricity sales rose 2% to highest-ever 5,719.0 GWh vs. 5,618.7 GWh while Singapore's sole LNG-fired power generator saw its net debt fall 68% to S$72.6 million at end-year from S$228.9 million at end-2022.
Philex reported core profit fell 44% to ₽963 million vs. ₽1.7 billion a year earlier on lower metal grades, recovery, and operating revenue, which fell 15% to ₽8.6 billion vs. ₽10.1 billion on lower metal production and lower copper prices. Looking ahead, commissioning and testing at Philex's new Silangan Mine is seen completing ahead of commercial operations in 2025 even as the mine life of the currently operating Padcal mine has been extended to end-2027.
More details are available at www.philexmining.com.ph.
Further information and analysis
Attached to this news release are:
More details about the earnings of First Pacific and of the businesses it is invested in can be found on www.firstpacific.com under the Investor Relations tab. The 2023 Annual Report will be posted to the website and to shareholders before the end of April 2024.
For more information, please visit https://doc.irasia.com/listco/hk/firstpacific/annual/2023/respress.pdf.
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