Winning CFO thrives in adversity
When Danny Y. Yu was offered the position of Chief Finance Officer (CFO) at publicly listed Philex Mining Corporation in late 2013, he had his reservations. In fact, he turned down the offer twice.
After all, mining has its “own peculiarities” and many variables outside of management’s control, such as protracted metal price downturns, unpredictable regulatory environment, and long gestation period for new projects. And for a CFO, on whose shoulders rest the responsibility of steering the organization through turbulence— oftentimes going beyond the traditional finance and treasury functions — mining is unappealing.
“There is often limited room to maneuver, especially taking into account the many non-financial variables, such as heavy regulatory requirements, numerous environmental concerns, community development and social acceptability responsibilities,” said Mr. Yu. Against the odds, he took on the challenge. With his financial stewardship, Philex became one of the most-awarded Philippine companies, maintaining profitability at the height of depressed metal prices, and establishing a strong and stable platform for long-term sustainable growth. And in recognition of his significant work in strengthening Philex’s organizational structure and corporate governance standards, Mr. Yu is receiving the highly coveted title “ING FINEX CFO of the Year 2016.” He joins the elite ranks of nine other CFO awardees from the Ayala Group, the SM Group, Jollibee, Shell, and GMA Network, Inc.
Having gained experience in more than 10 companies in the First Pacific Group for almost three decades, the 55-year-old who hails from Davao Oriental is no stranger to change. He believes that Philex could bolster its image as both a strong advocate of and leading example of responsible mining in the Philippines. This could make investors and regulators appreciate more the positive contribution of the mining industry in national development.
Responsible mining
When he became CFO of Philex in late-2013, Mr. Yu was faced with the twin challenges of how to mitigate the impact of plummeting metal prices and the stigma of the Padcal Mine incident in 2012.
To address both issues, Mr. Yu adopted a three- pronged plan: he streamlined the company’s corporate structure and business processes, instilled a culture of austerity, and helped rebuild the brand equity of Philex — all aimed at ensuring the long- term viability of its operations and paving the way for investments in the development of Philex’s new Silangan Project in Mindanao. To carry out his plan, he took over direct responsibility for the company’s risk management and corporate governance functions and helped focus on enhancing Philex’s public image of being a conscientious mineral resource development company. These entailed solidifying the investor relations department, overseeing the production of multi- awarded annual reports, and initiating the publication of Philex’s firstever Sustainability Report in 2014.
“Traditionally, Philex had always gone beyond compliance. For example, while the DENR required the ISO 14001 certification only in early 2016, Philex received its ISO certification as early as 2002. Through the direction of Philex’s CEO and President, Mr. Eulalio B. Austin, Jr., we also secured OSHAS 18001 for health and safety management in June 2015 even if it’s not a
government requirement,” explained Mr. Yu.
To continue this legacy, Mr. Yu worked closely with the whole management team to fortify the company’s compliance and enterprise risk management framework that will complement these certifications and help avert a repeat of the 2012 incident.
In 2014, Mr. Yu and his team institutionalized the corporate governance function in the organization, which al lowed Phi lex to consistently improve its score in the ASEAN Corporate Governance Scorecard ( ACGS) from 76 points in 2013 to 91 points in 2014 and further to 107 points last year, catapulting Philex into the top three among over 260 Philippine Stock Exchangelisted companies.
Under his watch, Philex became one of the Top 50 in the ASEAN region for corporate governance in the ACGS in 2015, won the much sought- after PSE Bell Awards for Corporate Governance for two consecutive years ( 2015 and 2016), and the Asia CEO Awards Corporate Governance Company of the Year in 2014. From 2014 to 2015, Philex also won the Gold Award in Financial Performance, Management, Corporate Governance, Investor Relations, Environmental and Social Responsibility from The Asset Magazine in Hong Kong.
This year, Phil ex emerged as one of the 15 companies recognized and awarded for corporate governance by the Institute of Corporate Directors, in close collaboration with the Fund Managers Association of the Philippines and the Trust Officers Association of the Philippines.
“Given the negative public perception surrounding the mining industry in general, it has been very encouraging to see Philex win so many corporate governance and other management performance awards over the past few years. Even some of our affiliate companies, under the MVP Group of companies, were surprised at our performance,” Mr. Yu said.
Culture of change
Aside from being the Corporate Governance Champion in Philex, the CFO also earned the monikers “Mr. Fix It” and “Cost- buster” within the MVP Group. He implemented a costconscious mindset that allowed Philex to “survive and to post respectable profitability” in 2014 and 2015 when most mining companies suffered heavy losses amid falling commodity prices. Despite lower gold and copper prices during the period, Philex posted profits of P703 million and P776 million, in 2014 and 2015, respectively. In the first nine months of this year, the company’s net income grew 76 percent to P1.1 billion, already exceeding its full- year 2015 figures, due in part to the continuous reduction in costs and expenses.
The initiatives included a corporate streamlining and rigorous spend management program, which resulted in cost and expenses reductions for three consecutive years and averted the premature expiration of Padcal’s declared mine life.
Mr. Yu’s uncanny ability to turn things around is rooted in his own personal history. The youngest in a family of six, he was born without a silver spoon in his mouth. He grew up deprived of basic conveniences, and even more so when their home and family business in Davao Oriental were razed to the ground, forcing the Yus to seek a better life in Cebu.
Growing up in an impoverished environment, one of his early unforgettable experiences was Christmas caroling at the posh Beverly Hills Subdivision in Cebu City, known for its extravagant houses, luxurious cars and lavish amenities. “My classmates thought I was well- off just because I had a Chinese surname. But in reality, back then, we stayed in a rented wornout apartment unit and did not have any luxury, not even basic appliances like a refrigerator or a TV set,” he confessed. To help augment their household income, during high school summer breaks while at Cebu Eastern College, he would join his father, a ship agent, on the ship from Cebu to Manila, selling mangoes onboard and then sailing back with Pinoy comics bought in Manila to sell at different port stops in Leyte.
His material hunger, however, propelled him to study harder such that he was able to support his own schooling by being a working student for almost three years. An accounting major, he graduated
magna cum laude from the University of San Carlos and holds a Master’s degree from the Asian Institute of Management, consistently landing in the Dean’s List during the entire program.
The reluctant awardee
While he was driven and passionate regarding his academic pursuits and professional career, Mr. Yu was the exact opposite when it came to winning a personal award.
“I was reluctant to participate in the CFO of the Year Search. I thought that CFOs of big cap stocks had an edge, considering the previous winners,” he said He realized, however, that “size does not matter” in the distinguished search. “In hindsight, I guess what’s really important is your contribution to your organization and the impact it will have going forward, especially in transforming and putting in place the foundations for long- term sustainable growth,” he said.
His role models include Philex chairman Manuel V. Pangilinan “for his wisdom, passion, hard work, and corporate social responsibility and being truly A Man for Others,” Wall Street icon Warren Buff e t for his business and investment philosophies, ” f ormer president Fidel V. Ramos for his statesmanship, and President Rodrigo Duterte for his political will. For his achievements, he also credits a wealth of mentors, including former partner at SGV & Co., the late Antonio S. Veloria; former boss Gilberto M. Vendiola, who was responsible for his AIM scholarship; and good friend James Y. Ho for teaching him the art of investing. “And for almost two decades, I look up to First Pacific Group CFO, Christopher H. Young, for sound advice on corporate finance matters,” he added.
As a guiding principle in business and in leadership, Mr. Yu said he is a firm believer in Benjamin Graham’s “margin of safety” principle of investing. “After all, when the tide goes out, you learn who has been swimming naked,” the CFO said, quoting American business magnate Warren Buffet.
Judging by how he has thrived in adversity, one would know that this is a CFO who will not be caught in such a precarious state.