Meet the ‘accidental’ CFO
Sometimes becoming the chief finance officer (CFO) of a highly successful and well-regarded company can happen through a happy accident. Such was the case for Manila Water Company’s Luis Juan “Chito” Oreta, this year’s ING FINEX CFO of the Year awardee. Unlike the typical financial executive who has an Accounting background, Oreta, who holds a degree in BS Business Economics from the University of the Philippines Diliman, did not start out as a number cruncher.
For half of his professional life, he worked at Bank of the Philippine Islands as an investment and commercial banker. After 14 and a half years, he moved to strategic planning at Ayala Corporation. A decade later, while serving as managing director at Ayala, he was concurrently offered the CFO job at Integrated Microelectronics, Inc., but only as “a short-term assignment.” Six months later, he discovered that being a CFO was no longer just an “accident,” but one that was written in his stars — in this case, written in “water.” “I was asked if I would be interested to move to Manila Water,” Oreta narrated. “I thought long and hard about it. After 10 years at (Ayala) Tower One, I felt it was the right time for a change of scene. Literally, a change of scene, from Ayala Avenue to Santa Rosa (Laguna) to the beautiful, virgin, and green location of Balara.”
Since 2009, Oreta did not just see the verdant forests of Balara, but also saw and was actively involved in Manila Water’s continuous amazing transformation — from its roots as a former state-owned water utility company, to a world-class service provider whose success story has been retold and recognized in several local and international forums and publications.
As its CFO, he oversees a pool of approximately 150 staff from various strategic business units, and occupies several positions within Manila Water and its subsidiaries located in and outside the Philippines.
TOUGH ACTS
Oreta earned the distinction as the ninth awardee of the annual search for the ING FINEX CFO of the Year by demonstrating excellence in being a strategist, a catalyst, a steward, and an operator, especially in the past year when his company continued its expansion while facing more than its fair share of challenges.
“He introduced or institutionalized corporate governance policies, not only at the parent level, but at the subsidiaries level as well. He professionalized management in the other local and international businesses we have acquired,” said Rosenni Basilio, director for financial planning and investor relations at Manila Water.
Among his contributions was introducing a “P&L mindset” across the organization, which made the company’s business units function like a “mini enterprise” that focuses, not just on its bottom line, but also on quality customer service. “This made every operating unit
manager responsible for their profitability and efficiency,” said Basilio.
Ma. Victoria Sugapong, who has been working with Oreta for 18 years now, said he played a key role in the rebirth of Enterprise Risk Management (ERM) in mid-2009. “He asked me to join Manila Water as chief risk officer to champion the cause of ERM across the organization. He had this vision of embedding ERM in the company and ensuring that it becomes a way of life and a shared responsibility in Manila Water,” she added.
From initially focusing on managing incidents such as pipe bursts, “the program was expanded to ensure risk management is embraced across the organization — from pipe laying, delivery of service to customers, treasury, and so on,” Oreta explained. “Beyond financial audits, we also expanded the practice of internal audits to include construction audits. We hired a couple of engineers who now do process audits on our plants, among other things. We also strengthened our procurement process by getting our people ISO-certified.”
As co-chair of the Manila Water team that was locked in a yearlong negotiation with the Metropolitan Waterworks and Sewerage System (MWSS), Oreta demonstrated astute leadership and negotiation skills that earned the respect of his colleagues and the regulators. As a result, the arbitration panel tempered the original rate-rebasing scheme, set general tariff rates at a reasonable level, and approved a clear business plan for future programs and projects of Manila Water.
“No one can do what he had done for the successful turnout of the rate rebasing issue with the MWSS. We give him credit for the successful negotiation,” said Gerardo C. Ablaza Jr., president and CEO of Manila Water.
Even as the company was going through a trying time during the arbitration case, Oreta was able to successfully conclude a collective bargaining agreement with the Manila Water Employees’ Union.
Under his watch, the company also broadened its business beyond Metro Manila’s 1,400-square-kilometer East Zone area that serves more than six million customers.
“Chito was very instrumental in our major acquisitions in Ho Chi Minh City, Vietnam, allowing for Manila Water ’ s regional expansion. He also played a key role in securing significant financing facilities at very reasonable terms to support the East Zone and non-East Zone expansion,” said Fernando Zobel de Ayala, chairman of the Board of Directors of Manila Water.
Manila Water now also has five operating subsidiaries in the Philippines ( Laguna, Boracay, Clark Special Economic Zone, Cebu, and Zamboanga) and four overseas ( two in Vietnam, one each in Myanmar and Indonesia). These subsidiaries now contribute 12 percent of the company’s consolidated net income from having zero contribution in 2009.
“The business of expanding overseas was premised on the fact that our success in Manila is something that we can export to the rest of Asia that have similar characteristics as Manila. I always said that Manila Water is an urban infrastructure player although that is changing and time will tell how good we can be in evolving beyond being an urban infrastructure player,” Oreta said.
Driving sustainable growth
Throughout his six-year stint as a CFO, Oreta has already tucked five “Asia’s Best CFO” titles under his belt and was highly instrumental in getting seven top corporate governance awards for Manila Water, including the Corporate Governance Hall of Fame at the third Bell Awards of the Philippine Stock Exchange, and being one of the top publicly-listed companies in the ASEAN Corporate Governance Scorecard. Manila Water was also recently selected as one of ASEAN’s top 50 publicly listed companies in corporate governance by the ASEAN Capital Markets Forum and the Asian Development Bank, one of only 11 Philippine corporates in the select list.
However, Oreta has always set his eyes on bringing home the highly-coveted “ING FINEX CFO of the Year” award, considered the equivalent of the Oscar awards for a Philippine CFO, given the thoroughness of the search and selection process. As an awardee, he also gets to take home a glass trophy especially made by National Artist for Sculpture Ramon Orlina.
These awards and accolades the CFO attributes to Manila Water ’ s focus on the customer, which is at the heart of its sustainability agenda. “In this business, you can never be successful without touching the lives of the poor. Let’s face it: a good number of our countrymen continue to be poor and one of their biggest hurdles is access to potable water. Healthcare is key to development and behind strengthening healthcare is access to clean potable water. So for you to be sustainable, you need to focus on this segment of the population,” Oreta said.
More than 1.6 million economically disadvantaged people now enjoy access to 24-hour clean and affordable water supply right from their taps through Manila Water’s flagship Tubig Para sa Barangay (Water for the Poor) program.
As the company’s co- pilot in driving sustainable growth, Oreta possesses four characteristics that made him a winning CFO. “Being a man of integrity, a person who supports innovation, a man who has a voice of reason, and a person who really handles people in extraordinary ways — for all these reasons, I can see why Chito has been recognized as CFO of the Year,” said Jaime Augusto Zobel de Ayala, vice chairman of Board of Directors of Manila Water.
“Being a man of integrity, a person who supports innovation, a man who has a voice of reason, and a person who really handles people in extraordinary ways — for all these reasons, I can see why Chito has been recognized as CFO of the Year.” — Jaime Augusto Zobel de Ayala Vice Chairman of the Board of Directors Manila Water Company