After 2GO, SM group not looking to buy other logistics firms

MANILA, Philippines – SM Investments Corporation (SMIC), the newest investor in 2GO Group Incorporated, is not looking to expand in the logistics industry anytime soon.

Frederic DyBuncio, SMIC president and 2GO Group director, said SMIC is not yet keen on acquiring other logistics companies aside from 2GO.

“No. At this time, we are fairly new in 2GO. We believe there is a lot of growth opportunities in 2GO,” DyBuncio told reporters on the sidelines of 2GO’s annual stockholders’ meeting in Pasay City on Wednesday, September 20. “We have our plates full.” (READ: SM Investments shakes up management, prepares 3rd generation)

DyBuncio said his group is expanding its fast-craft line, as it makes the most out of the government’s move to promote tourism outside Metro Manila.

“In terms of the growth, we are banking on tourism because it is where the government is pushing. We are looking at more [fast-craft vessels],” he added.

SuperCat, the firm’s premiere fast-craft line, currently has 8 vessels serving the ports of Batangas, Calapan, Bacolod, Iloilo, Cebu, Tagbilaran, and Ormoc.

Last August, SuperCat launched two new fast-craft vessels, catering to passengers taking the Cebu-Ormoc and Cebu-Bohol routes.

2GO’s bad debts

Aside from a fleet upgrade, the new management of 2GO is also aiming for a better year when it comes to financial performance.

Blaming bad debts and increased fuel prices, the country’s largest logistics solutions provider saw its net income after tax dip by 79% to P120.1 million in the 1st half of the year, from P567 million in the same period in 2016.

After restating its 2015 and 2016 financial statements, the management of 2GO recognized adjustments for provision for bad debts and inventory, amounting to P207.2 million. 

“We want to focus on improving it (2GO’s books) and increasing shareholder value,” DyBuncio said. (READ: Dennis Uy’s Chelsea Logistics wants a bigger pie of 2GO)

Dennis Uy, 2GO’s newly-elected president and chief executive officer, said the group’s internal growth targets are higher than last year.

“As the economy continues to grow, so [will] the movement of goods. We are poised to take advantage of this. Our internal targets should be higher,” Uy told reporters, without divulging the exact figures. (READ: How to grow a business, according to Dennis Uy)

With the marriage of the Philippines’ largest retailer and the country’s largest logistics provider, Uy said the SM group is tasked to develop an e-commerce platform for 2GO.

“We’ve delegated the SM group. We don’t have an e-commerce platform yet. We are developing. It’s all in progress,” he said, without providing details.

It was in April when SMIC paid $124.50 million for a 34.5% stake in 2GO’s parent company, Negros Navigation Company Incorporated (NENACO). This marked the union of the Philippines’ largest retailer with the country’s largest logistics provider.

In March 2017, Udenna Corporation, through its subsidiary Chelsea Logistics Corporation, acquired Udenna Investments BV, which owns approximately 39.71% voting interest in KGLI-NM, which in turn owns 59.59% equity interest in NENACO. 

With the acquisition by SMIC and Udenna, Uy said the management is exploring synergies that may be implemented to improve the overall operational performance of its various companies.

“The new management is very optimistic that the growth of 2GO will reach even greater heights as we move forward to further grow the business and become an even stronger player from 2017 onwards,” Uy told the stockholders. – Rappler.com