Expects slower growth in H2, but sees recovery by year-end

MANILA - The country's largest telecommunications firm reported a 14% rise in core net income for the first 6 months of the year, but is expecting slower growth for the second half of 2009.

Even as Filipinos begin to cut back on making phone calls and sending text messages amid the economic downturn, Philippine Long Distance Telephone Co. (PLDT) had a core net income of P20.8 billion as of end-June, higher than P18.7 billion recorded in the same period last year. Core net profit takes out the net effects of one-off items such as foreign exchange and derivative transactions as well as depreciation charges.

The consolidated net income of the PLDT group for the first half of the year stood at P19.7 billion, a 2% growth from P19.3 billion in the same period last year. Service revenues, on the other hand, grew 4% to P72.9 billion during the 6-month period on the back of strong data and ICT (Information and Communication Technology) services, which now account for 54% of the company's total revenues.

PLDT sees a dip in profit growth as it is halfway through the third quarter, a time when there are no prominent holidays in the country. But by the end of the year, PLDT President and Chief Executive Officer Napoleon Nazareno said they are likely to rake in more revenues due to the Christmas season and election spending for the 2010 polls.

"Profits in the second half are normally lower because of the third quarter drop," Nazareno told reporters in a press briefing on Tuesday.

Nevertheless, PLDT has raised its full-year core net income forecast to P41 billion from the previous P40 billion. The latest figure is an 8% growth from the company's core profit last year.

"We have faced tough times before and come out a stronger and better company. On the back of our strong first half performance, we have adjusted our core profit guidance for the year from P40 billion to P41 billion," PLDT Chairman Manuel V. Pangilinan said.

Consistent with its committed 70% divident payout ratio, PLDT declared on Tuesday an interim cash dividend of P77 per share, a 10% rise from P70 in 2008. The company said it will undertake a "look-back" approach at the end of the year to determine the payment of any special dividends.

"Nothwithstanding a more challenging environment, we are pleased to be able to sustain our committed minimum dividend payout of approximately 70% of core earnings with the declaration of this interim dividend of P77 per share," Pangilinan said.

PLDT is planning to borrow a total of P38 billion this year for capital expenditures and investments, including its 20% stake in power distributor Manila Electric Co. As of end-June, the company said it has committed P33 billion in new loans, of which P19 billion of new borrowings have already been drawn.

Debt repayments for the first half reached P12 billion, PLDT said. By year-end, net increase in debt after the planned borrowings is estimated to be at P20 billion. With reports from Reuters and Agence France-Presse