By ALBERT CASTRO

Profits of listed companies plunged 20 percent for the first nine months of the year pulled down by banks’ forex losses and 27 percent drop in services income.

A study done by the Philippine Stock Exchange (PSE) showed that holding companies’ profits plunged 42 percent.

The combined net income of listed companies reached only P162.82 billion from P203.04 billion last year.

Combined revenues went up 13.53 percent at P1.93 trillion from P1.70 trillion.

"The financial crisis, rising inflation battered profits," according to Francis Lim, PSE president.

Lim however took comfort from the 11 percent increase in sales which however represents growth that is a little over inflation rate.

"While companies in the US and in other countries scramble for funds or file for bankruptcy protection, our local companies have stayed afloat," said Lim.

The combined earnings of companies in the PSE index (PSEi) was down 12.46 percent to P125.27 billion from P143.09 billion.

Leading the losers among the PSE’s sectoral indices meanwhile was the sector of holding companies which had its combined bottomline reduced by 42.12 percent at P27.22 billion from P47.03 billion last year.

Following the trend of its fellow financial businesses in the US, financial firms under the financial sector saw profits drop by 36.53 percent at P21.84 billion from P34.42 billion. The services sector declined by 26.84 percent to P39.67 billion from P54.23 billion.

Companies in the SME Board saw net income slightly dropped 1.93 percent to P8.64 billion during the three quarters of the year from P8.81 billion in the same period a year ago.

While net income reductions remained the rule of the period, there were also some good performers among listed companies which drove their respective indices up.

Profits of the property sector rose 14.92 percent at P21.14 billion from P18.40 billion; the mining and oil sector was up 11.71 percent at P4.96 billion from P4.44 billion; and the industrial sector, up 7.74 percent to P47.97 billion from P44.52 billion.

"We are encouraged by the fact that some sectors managed to post higher profits despite the turbulent market environment. Our mining and oil, property and industrial sectors still posted higher combined incomes compared to the previous year. Against a backdrop of uncertainty, the resilience of our listed companies in these sectors is highly commendable," said Lim.

Analysts however are convinced that the year 2008 will be a challenging period for listed firms as the effect of the global slowdown drag local fundamentals.

Jose L. Vistan, Jr., AB Capital Securities, Inc., research head, said that "the prevailing crisis, creates negative fundamentals, specially from overseas, which results to lower margins and profits for local companies."

James Lago, PCCI Securities, Inc. research head, noted that the services-oriented firms had a very challenging time at the back of an increasing cost of services and goods which ate into the company’s profit margin.

Government economists have been claiming that service-oriented businesses would keep the local economy afloat considering that the Philippines is a service-oriented economy.

Lago said improvement in the net income of some sectors could be credited to these businesses’ inherent features like ability to lock in on delivery prices as was the case in mining firms.

Lago said that mining companies were able to lock in their shipment prices before commodity prices declined.