Consumer Sector - Philippines: 2Q26 earnings preview: margin pressure may be the strongest headwind

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Consumer Sector - Philippines: 2Q26 earnings preview: margin pressure may be the strongest headwind

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Consumer Sector - Philippines

2Q26 earnings preview: margin pressure

may be the strongest headwind

Industry Overview

2Q26 headwinds: margin pressure, demand challenges 24 July 2026

We expect the height of the Middle East conflict to weigh on gross margins in 2Q26, Equity

mainly due to: 1) Brent oil prices peaking at US$118.03/bbl. and averaging ASEAN | Philippines

US$96.87/bbl; and 2) the closure of the Strait of Hormuz to normal commercial shipping Consumer

until mid-June, alongside a significant increase in marine cargo insurance costs. These Philip Albert Felix ^^

factors drove a marked increase in the cost of packaging raw materials (e.g., Research Analyst

polyethylene) and fertilizers (e.g., urea). Wheat, corn, and soybean prices have also Philippine+63 2 8640Equity6718Partners

surged in 2Q26. Meanwhile, in the domestic macro environment, inflation averaged 6.1% philip.felix@pep.com.ph

in March-June-2026. The peso depreciated by 4.6% YTD, averaging at PH Julian Roxas ^^

Research Analyst

P60.13/US$1.00 and reaching a high of PHP61.75/US$1.00 during the first seven Philippine Equity Partners

months of 2026. We expect weak demand and higher input costs to weigh on Philippine julian.roxas@pep.com.ph

consumer-sector earnings in 2Q26. In terms of consumer behavior, we expect consumers Jojo Gonzales ^^

to: 1) focus on essential goods; 2) trade down; and 3) take opportunities to stock up at Philippine Equity Partners

consumer retailers (PGOLD, WLCON). jojo.gonzales@pep.com.ph

Why 2Q26 could set the tone for 2H26

Seasonally, 2Q is the period for inventory replenishment, whether for merchandise or Exhibit 1: Glossary