PHINMA’s 2020 Annual Stockholders Meeting
PHINMA CORPORATION
MEDIA ADVISORY ON THE 2020 ANNUAL STOCKHOLDERS MEETING
Embargo:10:30 AM, 24 June 2020
PHINMA Corporation announced at its 2020 Annual Stockholders Meeting, conducted online for the first time due to the continuing pandemic, improved financial results for its fiscal year ending December 31, 2019 with consolidated net income increasing to P437 million from P175 million in the previous year. This is attributed to consolidated revenue increasing 14% Year on Year to P11.3 billion in 2019 due to increased revenue from core businesses, mainly Construction Materials and Education. The Board of Directors of PHINMA Corporation declared a cash dividend of P0.40 per share that was paid to shareholders on March 27, 2020.
The full 2019 operations report of its President and Chief Executive Officer, Ramon R. del Rosario follows below:
My fellow shareholders,
Good morning and once again, welcome to the first online Annual Shareholder’s Meeting of PHINMA Corporation. As our Senior Vice President, Ms. Ruby Alvarez has briefed you on the financial results for 2019, I will be discussing the operational highlights of our Strategic Business Units.
While this is the annual shareholder’s meeting where we discuss our 2019 results, allow me first to provide updates on the impact of the COVID-19 pandemic on your Company. The pandemic has impacted millions around the world, causing deaths and lockdowns while economic forecasts all point to a global recession. Our hearts and prayers go out to all those affected and like everyone else, we hope that a vaccine will be developed soon.
In this time of global crisis, we are all the more committed to our mission of Making Lives Better. Your company’s response focused on three key areas: the safety of our people, the continuity of our business and the well-being of our communities. To take care of our people, management immediately implemented a work from home policy for all employees, while providing our employees with the tools and support that they needed to work from home. Skeleton staff such as security and janitorial services were deployed at operational sites. The safety and well-being of our employees is our foremost priority and with the help of our stakeholders such as our customers, suppliers and banks, we have been able to maintain productivity even while on a work from home basis.
Led by the PHINMA Foundation, the PHINMA Group rolled out PHINMA Reaches Out 2020 and deployed overP30 million to support our communities with a focus on those most in need of support. We provided financial assistance to no work, no pay, third party employees that support PHINMA. We provided food assistance and medical supplies to communities where our businesses operate.And we worked with partners like PBSP, Caritas, Dela Salle and Ateneo, among others, to support our health professionals and workers on the front lines as well as feed thousands of the most vulnerable families when and where no other assistance was available.
During the quarantine period, our businesses did suffer a decline in revenue especially when Luzon was under Enhanced Community Quarantine. From the beginning, we focused on liquidity management and ensuring our Strategic Business Units had ample cash to see themselves through the crisis and in fact, to take advantage of opportunities that might arise. Liquidity was reviewed on a daily basis while stringent financial planning, involving the testing and retesting of assumptions happened on a regular basis.
In Education, classes were able to conclude with final exams largely waived. Graduation will be postponed until such time as we can safely conduct them. In Construction Materials, we ceased operations on March 15 in North and Central Luzon and in the Visayas and Mindanao by the end of March. Our sites opened in line with the lifting of Enhanced Community Quarantine in their local areas. I am proud to say that PHINMA Properties was able to maintain strong sales efforts during this period with 271 units reserved from March 15 to May 31, purely through online sales and with virtual walkthroughs. Our two hotels in the Mall of Asia area, Microtel and TRYP by Wyndham, provided safe, secure lodging to frontliners during this period with robust occupancy rates. I enjoin you all to take this opportunity with me to thank all of our frontliners for their service.
Moving back to our 2019 results, in June 2019, PHINMA Corporation completed the sale of its energy business, allowing the company to focus investments in core businesses, particularly education and construction materials, areas where we feel that we have a strong competitive advantage.
In Education, PHINMA Education Holdings, Inc. holds your Company’s investment in 7 tertiary education schools as we closed our acquisition of Republican College last year. Despite the challenges faced by the private tertiary industry, PHINMA Education once again saw an increase in its freshmen enrollment, posting a 24% growth. As of school Year 2019-2020, PHINMA Education enrollment has grown to 74,187 students nationwide.
In 2019, PHINMA Education graduates again performed well in board accreditation exams, with the various schools posting a 100% first-timers passing rate in 40 different licensure exams. Since 2004 PHINMA Education has fielded 98 board exam topnotchers and 24,825 licensed professionals.
PHINMA Education continued to expand in Asia. In February 2019 PHINMA Education entered into a joint venture with an Indonesian educational institution to establish PT Ind Phil Management to manage tertiary schools in Indonesia. The first school under this arrangement is STIKES Kharisma in Karawang, West Java, a school known for its nursing and IT programs.
To support its rapid business growth, in 2019 PHINMA Education forged a partnership with Kaizenvest, the Netherlands Development Finance Company, and the Asian Development Bank involving the infusion of P1.875 Billion in new capital into PHINMA Education to support local acquisitions and expansion as well as international expansion in Indonesia, Vietnam and Myanmar. Despite the COVID-19 pandemic, these funds remain fully allocated to support acquisitions.
Moving forward, PHINMA Education plans to strengthen its presence through these acquisitions, extending its reach in greater Manila and other strategic areas such as the CALABARZON region. Globally, PHINMA Education views Indonesia as a key market for affordable education in the region. Our long term goal is to broaden the geographic reach of our affordable education within Southeast Asia and to become the largest affordable education network in the Philippines. We think that PHINMA Education will continue to be a school of choice for our target market due to our strong academic performance and our track record of improving employability for our students.
Our Construction Materials Group continued its rapid growth in 2019. Union Galvasteel Corporation maintained its industry leadership in a highly competitive market with almost 10 million equivalent sheets sold during the year.
Our new cement subsidiary, Philcement Corporation, continued to re-introduce our legacy, Union Cement brand to the market, reviving relationships with key customers and channels. Philcement was able to complete construction of its cement facility in Mariveles, Bataan early this year, making it fully operational and allowing Philcement to deliver on its promise to efficiently process and make available our high-quality cement nationwide. This facility has an initial capacity of 2 million tons of cement per year which allows Philcement to support the Build, Build, Build program of the Government by addressing the local shortage of cement.
For 2020, the increased capacity from Philcement’s Mariveles facility will enable further inroad of our Union Cement brand into the market as PHINMA supports the nation’s infrastructure development by ensuring a stable supply of quality cement in the market. The Construction Materials Group also expects to develop more synergies across the three companies while its strengthened regional partnerships unlock the potential of a larger Asian market for our products and services in the future. The Construction Materials Group is well positioned to support the government’s efforts to spur economic growth through infrastructure spending.
PHINMA Properties continued strategic changes to its business which resulted in a strong improvement on its profitability by starting development of pipeline projects, both within and outside of Metro Manila to secure future growth and profitability for the company. PHINMA Properties also continued to innovate by launching its first business targeted towards the shared economy, a co-working facility in partnership with Acceler8. This year, PHINMA Properties will continue developing a pipeline of core affordable projects while exploring new business lines such as shared economy rental models.
2019 marked the second year of operations of our TRYP by Wyndham hotel in the Mall of Asia area. The hotel was able to improve its occupancy rate to 76% and ended the year with a modest profit. Our flagship, Microtel Mall of Asia hotel, continued its robust performance. Despite significant challenges to its industry from the COVID-19 outbreak, PHINMA Hospitality still looks forward to further expanding the Microtel and TRYP brands across the country.
Entering 2020, the Philippine economy looked poised to continue its strong growth, backed by the timely approval of a record P4.1 trillion budget where over P2.5 trillion was allocated to infrastructure and social services spending. Combined with benign inflation and local interest rates, the country maintained a positive local business climate. The COVID-19 pandemic has drastically changed that view and we now expect 2020 to be a significantly challenging year for PHINMA Corporation similar to most other businesses in the country and across the globe. We are hopeful, however, that our businesses can achieve modest growth in 2021, then eventually return to a more vigorous growth path. We maintain our commitment to our various invaluable stakeholders including suppliers, partners, creditors and customers. We would like to express our gratitude to our board of directors for their invaluable guidance, and to our management teams and employees who share our mission of making lives better. We also reiterate our commitment to improve values for our shareholders and we extend our gratitude for your unwavering support.
Thank you all and have a good day.