LBC Express Holdings Inc.
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Araneta-led LBC Development buys more shares in Federal Resources

THE ARANETA family is acquiring more shares in Federal Resources Investment Group, Inc., as the backdoor listing vehicle of LBC Express, Inc. beefs up its capital stock.

Federal Resources entered into two separate deeds of subscription with Araneta-led LBC Development Corp. for the issuance of roughly 1.147 billion shares at P1 per share, the listed firm told the stock exchange.

The shares consists of 475 million common shares out of the increase in the authorized capital stock and 671.87 million common shares out of the unissued authorized capital stock once the Securities and Exchange Commission (SEC) clears the transaction.

Likewise, Federal Resources approved the increase in authorized capital stock to P2 billion divided into two billion shares from P100 million divided into 100 million shares. The proposed increase was lower than an initial plan to boost its capital to as much as P3 billion, which would provide the company the flexibility to fund the acquisition of LBC Express and embark on another fund-raising activity.

LBC Development Corp. secured a majority stake in Federal Resources in May and folded LBC Express into the listed shell company in July, paving the way for the latter’s entry to the stock market via the backdoor listing route.

Shareholders of Federal Resources approved this month a slew of amendments to its Articles of Incorporation and By-Laws that will facilitate its transformation into the cargo and courier business of the Araneta family.

LBC Express is involved in logistics and money transfer services. It has roughly 1,100 stores nationwide and 70 stores in 22 countries.

Once the backdoor listing is completed, the listed company intends to undertake a follow-on offering to bankroll it expansion drive, Federal Resources Chairman and Chief Executive Officer Santiago G. Araneta had said.

Proceeds from the offering will fund the expansion of its branch network, improvement of IT infrastructure and acquisitions, Mr. Araneta said. LBC Express plans to open 100 branches annually over the next three years.

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Reply this stock...after 2GO, ito naman ang tinatarget na logistics company

LBC earnings grow 10%

LBC EXPRESS Holdings, Inc.’s net income for the first quarter went up by 10% year on year on the back of the robust expansion of its air freight and courier services.

The logistics company’s quarterly report filed with the Philippine Stock Exchange showed its net income for three-month period reached P227.926 million, higher by 10.35% from the P206.531 million it earned in the comparable year-ago period.

LBC saw its income before tax rise to P328.03 billion from P296.65 billion amid an improvement in revenue and cost of services.

The company also benefitted from favorable freight rates of major carriers, increased utilization of flights and efficient use of sea carriers.

LBC said its service revenues in the January to March period rose 19% to P2.46 billion from P2.07 billion a year ago, primarily due to an increase in revenues from the logistics segment as both retail and corporate sales grew by 20% and 32%, respectively.

Revenues from its logistics business jumped 24.6% to P2.18 billion in the first quarter from the P1.75 billion seen in the preceding year’s comparable period, as the company added 40 new branches and expansion was boosted by growth in volume of air cargo, sea cargo and courier services rendered.

LBC said revenues from corporate clients increased 32.8% to P795 million in the quarter ended March 31 from the P598 million seen in the first three months of 2016.

During the first quarter, the logistics firm said cost of services was also up 17.7% to P1.61 million relative to the growth of volume in logistics services as operating expenses increased by 24% to P522 million from P421 million.

LBC’s logistics business includes retail or courier, air cargo forwarding and balikbayan box services, while its corporate sales include courier and freight forwarding and other specialized corporate logistics services. It also has a money transfer business.

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...tie up naman

OFW-centric Western Union taps ubiquity of LBC; signs up for digital shift

Western Union, a global money transfer company, is expanding its footprint in the Philippines, announcing on Thursday a partnership with logistics giant LBC Express.

The partnership with LBC, initially covering payout services from over 200 countries and territories, widens Western Union’s scale as competition increases and with financial technology startups and services making inroads in this sector.

Jeffrey de Venecia Navarro, Western Union country director, said in a press conference Thursday there was still a “big preference for the retail type of experience” in the Philippines.

Under the partnership, over 1,200 LBC branches will have money payout services. Western Union already has about 5,900 agent locations in the Philippines.

The combination of two well-recognized brands was also a practical step, Navarro said.

“The partnership with LBC is material because there a lot of customers who have been using LBC in other services, and are very comfortable using LBC. Putting Western Union as a brand with LBC makes sense,” he said.

Western Union and LBC are seeking a bigger share of the money transfer business, considered one of the major pillars of the Philippine economy. Remittances from January to July this year hit $16.1 billion, up 5 percent, according to the Bangko Sentral ng Pilipinas.

For the whole of 2017, cash remittances from Filipinos working overseas are forecast to hit $28 billion, up 4 percent, the BSP said.

“The branch network, where you can offer financial services that are compliant with the law, that are compliant with a high level of customer service, are still going to be very important,” Lorenzo Ocampo, president and CEO of Petnet Inc., said on Thursday.

Petnet, also known as Pera Hub, has the largest Western Union agent network in the Philippines.

According to Navarro, the digital shift is already happening—and Western Union is taking early steps.

"Our agents understand that consumers are changing, they also want an option for digital services,” he said, hinting that an announcement here would soon be made.

Navarro added the Western Union group was also studying new payment technologies, including digital currencies like Bitcoin.

“In terms of Bitcoin, I know centrally we are looking at the potential, including the technology of how Bitcoin can be integrated into our system and how it helps in terms of delivering the service to consumers,” he said.

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LBC Express taps India firm for digital pivot

AS part of its digital pivot, LBC Express Inc. signed on Wednesday a deal with Chennai, India-based Ramco Systems Ltd. to beef up the Philippine courier firm’s logistics and supply-chain operations.

LBC Express President Miguel Angel A. Camahort said the main objective of getting the Ramco product is to consolidate and automate the operations of the company both in the local and foreign markets. He said this initiative signifies the company’s move of building its capability in the digital era.

“This is a major part of our transformation and that is why we are making a significant investment,” Camahort said in a news briefing in Makati City.

He, however, declined to disclose how much the “multimillion dollar” deal with Ramco Systems is worth.

Camahort said this is the second time that LBC Express partnered with the software solutions provider.

“We are pleased to partner with Ramco for the second time following a very successful first year with their Cloud HR and payroll solution,” he said. “Logistics operations is the lifeline of our business. The decision to replace our existing systems with a new-age Logistics suite is aimed at gaining complete visibility of operations to arrest revenue leakage and improve productivity.”

Camahort said the software takes effect within 10 to 12 months and will cover 1,300 global branches and 121 warehouses. He added the acquisition of the new software will also enable LBC Express to prepare for the coming trends three years down the road and for the business-to-business (B2B) operations.

LBC Express Chief Information Officer Alfie Deato, meanwhile, said the company has to ride the technological wave to remain competitive in the industry. He added implementing Ramco’s enterprise resource planning system will enable the company to improve its international visibility and tracking.

Ramco Systems CEO Virender Aggarwal said the logistics business has seen tremendous growth brought about by the e-commerce boom and increased penetration of the Internet and mobile phone. As a result, companies like LBC have to make investments in its infrastructure to keep pace with the demand and expand.

Ramco Logistics Software is an integrated cloud-based platform for logistics and courier-service providers seeking high-performance logistics software.

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LBC, PDIC seek amicable settlement of case

THE Makati Regional Trial Court (RTC) has granted the joint motion filed by the Philippine Deposit Insurance Corp. (PDIC), LBC Express, Inc. and LBC Development Corp. to postpone the pre-trial to give time for the parties to discuss an amicable settlement.

In a disclosure to the stock exchange, LBC Express Holdings, Inc. said the Makati RTC Branc 143 moved the pre-trial to Sept. 6, 2018.

“With the granting of the joint motion to suspend proceedings, the parties would have the opportunity to amicably settle and resolve the case,” the company said.

In 2015, LBC Development Bank, which is represented by the PDIC, filed a case against LBC Development Corp. and LBC Express to collect around P1.8 billion in unpaid service fees.

Also tagged in the case is LBC Properties, Inc., and individuals Juan Carlos Araneta, Santiago G. Araneta, Fernando G. Araneta, Monica G. Araneta, Carlos Araneta, Ma. Eliza G. Berenguer, Ofelia F. Cuevas, Apolonia L. Ilio, Joseph Jeffrey Rodriguez, and Arlan T. Jurado.

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...really? good!

LBC sets aggressive goal of 100 new stores a year until 2020

LBC Express Holdings, Inc. plans to open 100 stores per year until 2020, while embarking on a three-year program that will digitize its core logistics businesses.

“With the network expansion, we’re tasked to open around 100 stores every year,” LBC Express President and Chief Operating Officer Miguel Angel A. Camahort told reporters after the company’s annual shareholders’ meeting in Pasay City on Monday.

The planned store openings will bring the LBC Express network to around 1,400 this year. The company has already opened around 45 to 46 stores during the first half of 2018.

LBC Express Chief Finance Officer Enrique V. Rey said each store costs about P700,000 to P1 million each to put up.

LBC Express will also be consolidating its international affiliates, particularly those in United Kingdom, Italy, Spain, Germany, and Hong Kong, under the company.

It is the process of acquiring its overseas units to prop up its global revenue streams.

Mr. Rey said they want the affiliates to be “healthier” before being folded into LBC Express, saying that the Europe business has been “challenged.”

LBC Express’ international units currently account for less than 5% of the total business.

The store network expansion forms part of LBC Express’ digital transformation until 2020. Mr. Camahort said the company will be digitizing its operations in response to the role of technology in transforming its business processes.

“With digitization set to revolutionize the entire industry, we see another opportunity for LBC to define itself across all its business segments. Technology has literally changed every aspect of the way businesses operate, and LBC is on the move to make sure they lead the pack,” Mr. Camahort said in a speech during the annual shareholders’ meeting.

This three-year digital transformation includes three aspects, such as investments in technology, training for people to cope with the new technology, and the expansion of its store network.

“We partnered with Ramco, a huge system integrator provider for the single platform for the system requirement. We’re also invested now in handheld units for all our couriers to bring with them handheld units for ease of transaction,” Mr. Camahort said.

The Araneta-led firm has also introduced new services that facilitate transactions for online and e-commerce businesses, namely cash on pickup (COP) and cash on delivery (COD). These target small online sellers and starting entrepreneurs.

“Social sellers have been a major driver for our retail component and we feel that this will continue…we feel strategically we have to position ourselves to support these social sellers,” Mr. Camahort said.

Meanwhile, LBC Express said it will resubmit with the Securities and Exchange Commission its registration statement for a follow-on offering (FOO) to reflect the financial results for the first quarter of 2018.

LBC Express encountered delays in preparing its registration statement for the FOO since its previous underwriter was forced to close shop last year.

Details of the share sale, however, remain the same, with 69 million shares priced from P13 to P22 each to be sold. Abacus Capital and Investment Corp. has been tapped as the new underwriter of the offering.

LBC Express’ net income attributable to the parent jumped 143% to P559.8 million in the first three months of 2018, as revenues picked up 12% to P2.75 billion for the period. The company expects its second quarter earnings to be “better than the first quarter.”

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LBC acquires courier unit in Malaysia

LBC Express Holdings, Inc. continues to consolidate its international affiliates, as it announced on Wednesday the acquisition of 92.5% of shares in Malaysia-based LBC Mabuhay.

In a disclosure to the stock exchange, the listed company said it bought 924,998 shares in LBC Mabuhay from Jamal Limited. LBC paid $461,782 for majority stake in the courier services company.

“The acquisition is expected to benefit the Company by contributing to the global revenue stream of the Company,” it said.

LBC earlier this year said it will consolidate its international affiliates, particularly those in United Kingdom, Italy, Spain, Germany, and Hong Kong, under the company.

In June, LBC acquired four remittance and cargo companies, which offer LBC services in Australia and Singapore. In March, LBC bought a 30% stake in Orient Freight International, Inc. for P218.88 million.

Meanwhile, LBC said its net income attributable to shareholders of the parent company nearly tripled to P619.314 million during the second quarter, from P212.25 million a year ago.

The service business generated P3.033 billion in revenues for the quarter ending June 30, up 24% “mostly from the growth in both retail and corporate logistics sales by 21% and 40%, respectively.”

LBC’s logistics business recorded a 22% rise in revenues to P2.673 billion, driven by a 33% growth in the volume it handled for the period.

“The increase in volume of services was mainly attributable to the horizontal growth of the Company, evidenced by the net addition of 60 branches in the Philippines. In addition, the branches in Middle East introduced their local courier services which gained a positive customer response and contributed to the increase in sales,” LBC said in a regulatory filing.

The growth in operating expenses was limited to 2.14% at P530 million, subdued by lower royalty and professional fees. But primary drivers of the increase were the 12% rise in salaries and wages and a P20-million additional spending for taxes and licenses.

LBC saw its six-month attributable net income rise 134.63% to P1.128 billion on the back of an 18% growth in gross profit, a 4% cut on operating expenses, a P439-million gain on derivative and an increase in foreign exchange gain.

Last month, the company said it plans to open 100 stores every year until 2020, having launched around 45 to 46 stores already during the January to June period.

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LBC Express buys stake in 2 Brunei affiliates

LBC Express Holdings, Inc. acquired a stake in two Brunei-based logistics firms, as it continued to consolidate its international affiliates.

In separate disclosures to the stock exchange on Monday, the listed logistics and money services firm said it has acquired 500 shares in LBC Mabuhay (B) SDN BHD (LBC Mabuhay Brunei) for a total of $225,965, or $451.93 each. This represents 50% of the company’s outstanding shares.

LBC also purchased one share in LBC Mabuhay Remittance SDN BHD (LBC Mabuhay Remittance Brunei) for $557,804, representing half of the company’s outstanding stock.

LBC Mabuhay Brunei is involved in logistics, while LBC Mabuhay Remittance engages in the remittance business in Brunei.

“The acquisition is expected to benefit the company by contributing to the global revenue stream of the company,” LBC said for both transactions.

The company will be paying both transactions in cash.

LBC has been snapping up its cargo and remittance affiliates since the start of the year. It acquired in March LBC Mundial Corp., LBC Mabuhay Saipan, Inc., LBC Mabuhay Hawaii Corp., and LBC Mabuhay North America Corp. for a total of $8.5 million.

In the same month, the company also purchased a 30% stake in Orient Freight International, Inc. for P218.88 million. It further acquired an 86.11% share in QUADX, Inc., a firm that owns, maintains, and operates an online marketplace and retail store.

The firm then acquired $461,782 worth of shares in Malaysia-based LBC Mabuhay last August.

LBC earlier said that it plans to consolidate its international affiliates this year, specifically those located in the United Kingdom, Italy, Spain, Germany, and Hong Kong.

The company’s net income attributable to the parent surged 134.63% to P1.128 billion in the first six months of 2018, as gross revenues rose 18% to P5.78 billion.

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BSP disqualifies Araneta from bank directorships

LBC Express Holdings, Inc. said on Monday a board director in one of its subsidiaries was temporarily disqualified by the Bangko Sentral ng Pilipinas (BSP) from becoming a director or official of any financial institution.

“(LBC Express Holdings) was advised by LBC Express, Inc. that its director, Santiago G. Araneta, received a letter from the BSP regarding the approval by the Monetary Board of a resolution temporarily disqualifying Mr. Araneta from becoming a director and/or officer in any BSP-supervised financial institution,” the company said in a disclosure to the stock exchange.

LBC Express said the disqualification was related to the closure of LBC Development Bank, Inc. (LBC Bank), where Mr. Araneta was a director.

“The involvement of Mr. Araneta, if any, in the closure and the acts that led to the same is currently being evaluated by the BSP. Pending completion of such evaluation, it appears that the BSP has imposed such temporary disqualification,” the listed company said.

In 2011, the BSP Monetary Board ordered the closure of LBC Bank, which affected some 33,191 accounts with an estimated total deposit worth P5.95 billion.

In 2016, the Philippine Deposit Insurance Corp. (PDIC) filed a complaint with the Department of Justice against LBC Express owners for estafa and violation of the PDIC Charter, which led the bank to lose P1.8 billion.

Parent company LBC Express Holdings reported a 71% increase in net income during the nine-month period to P1.265 billion, as revenues rose 27% to P9.658 billion.

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