By Business World
Prolonged monsoon rains are expected to weigh on the third-quarter operations of consumer-facing and construction companies, while logistics and mining firms could face higher costs and delays, analysts said.
“The prolonged monsoon rains are likely to create a modest but noticeable drag on third-quarter corporate activity,” Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said in a Viber message on Wednesday.
He said the impact would vary across industries and would likely remain temporary unless severe weather persists through much of the quarter or causes significant damage to infrastructure and supply chains.
Heavy rainfall and flooding have affected parts of Metro Manila and Luzon in recent weeks, disrupting roads and prompting work and class suspensions.
He said retailers, mall operators, and restaurants could experience weaker customer traffic as prolonged rainfall makes travel more difficult and discourages discretionary spending.
He identified SM Prime Holdings, Inc., Robinsons Land Corp., Ayala Land, Inc., SM Investments Corp., Robinsons Retail Holdings, Inc., and Puregold Price Club, Inc. as among the companies that could see softer physical traffic during periods of heavy rainfall.
The impact would depend on their business formats, he added.
“Large destination malls and discretionary retailers are more vulnerable to consumers postponing visits, whereas supermarkets and essential retailers tend to be more defensive because purchases are necessities and consumers can shift the timing rather than eliminate spending altogether,” Mr. Arce said.
The earnings impact on mall operators would likely remain limited if weather-related closures are infrequent because rental income is partly protected by fixed leases, he said.
Mr. Arce said businesses tied more directly to customer spending, including tenant sales, cinemas, entertainment, and parking, could be more affected. Repeated disruptions could also hurt smaller tenants with limited financial buffers, he added.
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