GT Capital eyes mid-single digit growth

GT Capital Holdings, Inc. looks to grow its earnings in the mid-single digits for full year 2018, amid recording flat profit for the first semester after the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law dented auto sales.

In a regulatory filing, the holding firm of tycoon George S.K. Ty reported that net income attributable to equity holders of the parent dropped by 18% in the second quarter to P3.4 billion, versus the P4.1 billion it booked in the same period a year ago. Revenues for the quarter also slumped six percent to P55.7 billion.

This brought GT Capital’s attributable profit one percent lower to P7.1 billion in the first half of 2018, after revenues slipped by six percent to P101.2 billion, reflecting the slowdown in the number of units sold under Toyota Motor Philippines (TMP).

“This is attributed to the front-loading of orders late last year in anticipation of the TRAIN Law and the run-out of the previous generation Vios during the second quarter... On the other hand, our affiliates Metrobank, AXA Philippines, Metro Pacific, and TFS delivered strong results, mitigating the soft numbers from the auto sector,” GT Capital President Carmelo Maria Luza Bautista said in a statement.

The implementation of TRAIN last January directed higher excise taxes on vehicles, with those costing P600,000 and below slapped with a 4% tax, instead of the previous 2%. Taxes for cars priced between P600,000 to P1 million are now at 10%, from the previous scheme of P12,000 plus 20% of the amount in excess of P600,000.

With this, sales of Toyota vehicles dropped by 14% to 73,136 in the first half. The company said this is close to the industry’s 12% year-on-year decline to 191,495 units sold for the period, citing data from the Chamber of Automotive Manufacturers of the Philippines, Inc.

TMP’s consolidated net income stood at P4.6 billion for the first half, after revenues of P76.4 billion. Despite slower sales, the company maintained its leading market position with a share of 38%.

“We are expecting that market demand may normalize by the fourth quarter and resume its growth momentum by 2019 due to TMP’s new model launches and sufficient inventory,” Mr. Bautista said.

Meanwhile, Metropolitan Bank & Trust Company recorded a 16% increase in net income to P11 billion for the first half. The company benefited from the growth of its core business, alongside an 18% jump in its loan portfolio to P1.3 trillion.

GT Capital’s property units Federal Land, Inc. and Property Company of Friends, Inc. booked P9.7 billion in combined revenues for the first half, with a consolidated net income of P1.1 billion.

Metro Pacific Investments Corp.’s consolidated core profit went up by 10% to P8.6 billion from January to June. The infrastructure conglomerate’s performance was driven by higher investments in the power sector, continued traffic growth in its operating toll rods, and volume growth from Maynilad Water Services, Inc.

Its insurance business, Philippine AXA Life Insurance Corp., delivered a 35% profit increase to P1.3 billion.

OUTLOOK

Asked for the company’s outlook for the rest of the year, Mr. Bautista said he is looking forward to a recovery.

“Still positive growth (for 2018), but siguro single-digit. Mid single-digit. We’re expecting the bank to continue its strong performance, the insurance to (have) strong performance. We hope for some turnaround in the property side. For Toyota, depending on how fast the volume picks up,” Mr. Bautista told reporters on the sidelines of a media and analysts’ briefing in Bonifacio Global City on Wednesday.

The GT Capital executive noted that higher spending related to the upcoming elections may start as early as the fourth quarter of this year, which could boost sales for TMP.

“Election spending maguumpisa na yan by November and December. There’s always been a high statistical correlation between unit sales of cars and election years. There’s just more money going around, for logistics, relations... and usually the atmosphere is positive,” Mr. Bautista said.

Shares in GT Capital dropped by 4.66% or P44.50 to close at P910 each at the stock exchange on Wednesday.