First Pacific wipes out 14 years of profit


PLDT's profit contribution rose sharply to $42.8 million from $16.6 million in 2000

staff and wires

HONG KONG, China -- Asian conglomerate First Pacific Co. reported a $1.8 billion net loss for 2001, as 14 years of profits from its lucrative businesses were wiped out.

The full-year loss, the conglomerate's first in 20 years, came thanks to a $1.7 billion asset impairment provision and a $108.6 million loss to write down assets.

The company, whose businesses span food to telecommunications, also blamed currency fluctuations and disappointing earnings at some of its businesses for the loss.

Executive chairman Manuel Pangilinan said the operating-profit contribution from continuing businesses climbed 13 percent to $61 million.

But recurring profit before foreign-exchange losses and one-time items dropped 13 percent, reflecting the company's reduced business base.

Despite the devastating result, Pangilinan said the asset writedown and a move to pay off corporate bonds were "necessary and prudent."

"It better aligns First Pacific's book values with market values at this point in time, and the more realistic values afford a basis for sensible financial performance measures going forward," Pangilinan said, in a statement accompanying the earnings.

Asset writedown, bonds

Pangilinan said that during the course of 2001, management had been rigorously reviewing the book value of its investments.

A continued and substantial decline in regional currencies in Indonesia and the Philippines, continued economic turmoil in the region, and a heavy debt burden all took a toll.

First Pacific has invested heavily in Indonesia and the Philippines since 1999, betting big on a Southeast Asian recovery following the 1997-98 Asian financial crisis.

Upon entry, it gained a 48.7 percent stake in instant noodle giant PT Indofood Sukses Mamur and 24.5 percent of Philippine Long Distance Co (PLDT).

Writing down the assets knocked total shareholder equity into the red, to a negative $191.2 million. Just a year ago, the company had equity of $369.5 million.

It also wiped out First Pacific's entire earnings of $1.69 billion from 1988 through the year 2000.

To pay off these debts, the company sold its stakes in Thai companies Berli Jucker Co. and Darya-Varia Laboratories last year and secured a $200 million two year term loan from ING Bank NV.

Nonetheless, Pangilinan assured the provisions would not affect First Pacific's sound financial position, or the long-term growth potential of its principal businesses.

PLDT profit improvement

Among those, First Pacific boasts of the profit contribution from PLDT , which rose sharply to $42.8 million from $16.6 million in 2000.

PLDT is the largest land-line and cell phone company in the Philippines.

"The year 2001 saw PLDT triple its peso net income. Its cellular businesses, Smart and Piltel, are market leaders and, between them, closed 2001 with 6.4 million subscribers, up 81 percent year on year," Pangilinan said.

First Pacific's Indian cell-phone operation, Escotel, lost $6.2 million. But that was less than last year, when it lost $11.8 million.

The conglomerate took another knock because earnings from its Indofood business fell 14 percent to $48.1 million from $55.7 million in 2000.

Reuters contributed to this report.