Food & Beverage, retail sectors overshadowing other sectors in PH
A comparative outlook at profitability indicators since 1997 shows that retail and food & beverage (F&B) companies have averaged higher rates of return than some of the top telecommunications and real-estate companies in the Philippines, a statement showed.
Based on an academic research paper by University of the Philippines (UP) Professor Emeritus Epictetus Patalinghug, PLDT and Globe Telecom, as well as real-estate companies, such as SM Prime and Ayala Land, are earning below the average rate of returns attained by top Philippine firms in other industries over a longer time horizon.
He said that department store chain SM, for instance, had a return on assets (ROA) of 14.42 percent, while the ROA of a beer company, such as Asia Brewery, reached 12.13 percent.
PLDT and SM Prime, on the other hand, recorded ROAs of only 9.18 percent and 8.49 percent, respectively. Globe and Ayala Land were even lower in rank with 6.7 percent and 5.96 percent.
Data show that as telcos and developers aggressively embark on increasing capital expenditures, they must be able to generate enough cash flow to sustain the needed investments in capital-intensive industries.
More significantly, high capital-intensive industries evidently require high margins to be viable.
The lack of government spending on national telecommunications networks, and on much needed housing and transport infrastructure, adds to the challenges of competing in the said industries.