Expansion drive puts a drag on Cosco’s profit

Full-year growth in the earnings of Cosco Capital Inc., the supermarket, liquor and property holding firm of billionaire Lucio Co, was flat as “aggressive” store expansion in its grocery business offset overall growth.

In a stock exchange filing on Friday, Cosco said its net income grew by only 1 percent to P12.4 billion last year from P12.3 billion the year before.

At the same time, revenues climbed by 8.8 percent to P214.5 billion despite macroeconomic challenges.

Retail businesses Puregold Price Club Inc. and S&R Membership Shopping Club accounted for 69 percent of the total earnings, while liquor distribution through listed The Keepers Holdings Inc. contributed 24 percent. The commercial real estate segment accounted for 7 percent.

Puregold and S&R booked P199 billion in sales, an 8-percent increase due to higher foot traffic attributed to consumer revenge spending and post-pandemic recovery.

“The company continues to see a buoyant trajectory in topline growth for the balance of the year,” Cosco said in its disclosure.

Spirits lift

However, the retail segment also saw its earnings drop by 7.4 percent to P8.6 billion due to a decline in margins caused by aggressive store expansion and an increase in retirement benefit expenses, according to Cosco.

The Keepers, meanwhile, saw its consolidated revenue rising by 17 percent to P16.3 billion. Net income jumped by 30 percent to P2.9 billion due to stronger sales of imported brandy, spirits, wines and specialty beverages.

Energy debut

Cosco also noted that imported brandy Alfonso had already surpassed prepandemic sales levels.

Further, the commercial real estate segment posted a 7-percent increase in rental revenue to P1.95 billion on a rise in economic activities and the full resumption of rental rates based on contracts.

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Net income of the segment likewise grew by 10.4 percent to P933 million.

Specialty retailing business Office Warehouse Inc. booked a 20-percent jump in revenues to P2.15 billion, while net income leaped by 14 percent to P78 million.

Cosco in March announced that it would soon enter the renewable energy space via its acquisition of a 60-percent stake in Catuiran Hydropower Corp. for P551.88 million.

Co will join tycoons Sabin Aboitiz of the Aboitiz Group and Manuel Pangilinan of Manila Electric Co. in hopes of increasing the share of renewables in the country’s energy mix. —MEG J. ADONIS INQ