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Manila Bulletin devider Business devider LBC earnings drop due to CREATE Law

LBC earnings drop due to CREATE Law

Published May 24, 2021 05:00 am

Logistics and remittance firm LBC Express Holdings Inc. reported a 24 percent drop in net income to P141.88 million in the three months of 2021 from the P187.71 million earned in the same period last year on tax adjustments under the Corporate Recovery and  Tax Incentives for Enterprises (CREATE) Act.

In a disclosure to the Philippine Stock Exchange, the firm said the decline in earnings is mainly due to the effect of CREATE Law which requires adjustment in deferred taxes. 

The company's service revenue increased by 15 percent to P4.36 billion for the first quarter of 2021 from P3.8 billion in the same period last year.

“Improvement of revenue is mainly from logistics segment with overall growth of 17 percent,” LBC said.

Increase in domestic revenue for logistics segment is 13 percent, driven by an additional 75 Philippines retail branches and improvement in sales performance of existing branches. 

Overseas branches contributed a 27 percent upsurge in revenue mainly due to higher volume across all countries. 

Cost of services increased by 16 percent to P3.2 billion for the first quarter of this year from P2.75 billion for the three months ended March 31, 2020. 

“Cost of delivery and remittance is higher relative to increase in volume. There is also significant increase in outsourced manpower cost to cover operations in warehouses which opened mid-2020,” LBC said. 

Depreciation and amortization went up by 26 percent pertaining to amortization of right-of-use assets recognized during the period.

Utilities and supplies grew by 8 percent driven by the increase in packaging materials consumption in relation to volume. Utilities were also higher due to additional branches and warehouses. 

Operating expenses decreased by 8 percent to P680.32 million from P739.05 million, caused by lower advertising and promotion due to decrease in production, television, radio, and digital advertisements and lesser travel expenses for the period.

This was partly offset by COVID-19 related expenses such as medical and sanitation supplies, test kits, medical professional fees, shuttle bus rentals, and donations related to vaccines during the period. 

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