Inflation, strong peso contribute to falling net profit at Globe

The Philippines’ second largest telecoms company by subscribers and revenues, Globe Telecom, said its first-quarter core profit dipped 4% as rising inflation and a strong peso adversely impacted on group revenues. The telco’s core net profit was PHP3.51 billion (USD83 million) in the three months to 31 March 2008, down from PHP3.67 billion in the corresponding period of 2007. On a more positive note, net profit (including non-core provisions) climbed 32% y-o-y to PHP3.42 billion thanks to lower financing expenses. Thomson Financial reports that the group’s outgoings for 1Q07 were inflated by one-time charges relating to Globe’s early redemption of USD300 million worth of notes due in 2010. Group revenue for the period under review was PHP15.54 billion, compared with PHP15.61 billion the previous year, and in a statement, Globe noted that ‘Rising food and fuel prices, and the impact of the strong peso on the spending power of the overseas Filipino worker-dependent families have affected demand for the company’s services.’ The company has warned that it could struggle to maintain ‘double-digit’ growth in its sales during fiscal 2008, partly due to rising inflation. Globe Telecom said its mobile phone base stood at 21.3 million at the end of March 2008, up 26% year-on-year.