Big firms weigh impact of Ukraine-Russia war

MANILA, Philippines — Some of the country’s biggest conglomerates are jittery over the impact of Russia’s war against Ukraine, taking a more cautious stance in reviewing their expected profit guidance for 2022.

The continuing war between Russia and Ukraine is pushing global crude prices to the ceiling, translating to more expensive pump prices in the country, which in turn are putting pressure on inflation and consumer spending.

SM Investments Corp. (SMIC), the biggest conglomerate in the country in terms of market capitalization, for instance is taking into consideration the impact of skyrocketing oil prices on the business environment amid Russia’s war against Ukraine.

SMIC vice chairwoman Teresita Sy-Coson said the company may revise its plan, depending on the impact of the ongoing conflict.

“We were all prepared to gear up this year, especially this month, until the last few days...And when we see the stock market going down, I think we need to go back to the drawing board and redo a lot of things,” Sy-Coson said in a recent interview with Bloomberg TV.

Economists said the surge in oil prices could push inflation upward, which in turn would cut into the purchasing power of consumers and thereby affect many businesses.

Sy-Coson said the surge in commodity prices could drive operating costs higher and dampen consumer demand, which businesses were expecting to pick up this year, along with the reopening of the economy and the slowdown in COVID-19 infections.

Ayala Corp., the country’s oldest conglomerate, is likewise keeping a close watch on the negative impact of rising oil prices.

Ayala president and CEO Fernando Zobel de Ayala said they are mindful of the impact of the Ukraine-Russia conflict on the company’s recovery and investment programs.

“In particular, we are carefully monitoring how the surge in oil prices would affect domestic interest rates, inflation, and the global supply chain,” Zobel said.

The Ayala Group is pouring in P285 billion in combined capital expenditure and investments this year, higher than the P228 billion in 2021.

Tycoon Manuel V. Pangilinan, chairman of Metro Pacific Investments Corp., said that if the conflict pushes inflation upward, it could affect the country’s economic growth and dampen consumer’s income.

Thus, MPIC is closely monitoring the situation and is likewise reassessing its profit guidance for 2022.