LUCIO Tan
Tycoon Lucio Tan-led LT Group Inc. (LTG) posted a 9-percent year-on-year growth in net profit to P6.83 billion in the first nine months, mostly driven by higher earnings from its tobacco businesses.
The tobacco business under PMFTC Inc. accounted for 42 percent or P2.87 billion of total attributable income for the nine-month period, followed by banking arm Philippine National Bank (PNB) which contributed P2.59 billion or 38 percent.
Other contributors were: Asia Brewery Inc. which pumped in P455 million or 7 percent of attributable income, while Tanduay Distillers Inc. added P438 million or 6 percent. Property arm Eton Properties Philippines Inc. (Eton) and the group’s 30.9 percent stake in Victorias Milling Company Inc. (VMC) each provided around P236 million or 4 percent.
Income from the tobacco business reached P2.88 billion, surging by 60 percent year-on-year, mainly due to improved pricing and better sales mix. In November 2016, PMFTC raised the price of Marlboro for the first time since January 2013, with the recommended retail price per stick set at P3.50 from P3 previously.
PNB’s net income amounted to P4.64 billion for the first nine months, 22 percent lower year-on-year, mainly attributed to lower gains from the sale of idle assets compared to last year.
The bank’s net interest income increased by 10 percent year-on-year to P16.16 billion on the back of a 22-percent expansion in loan book. Fee-based businesses also grew by 18 percent to P2.36 billion on higher deposit- and trade-related businesses, arranger’s fees, bancassurance and underwriting fees.
Other income fell by 44 percent to P3.88 billion, primarily due to lower gains from the sale of idle assets, while trading and foreign exchange gains declined by 30 percent to P1.61 billion.
Net earnings from Asia Brewery declined by 49 percent year-on-year to P455 million, primarily due to higher spending on new products.
Revenues were 12 percent higher year-on-year at P10.11 billion with the higher contribution from bottled water and soymilk. Cobra Energy Drink and Vitamilk soymilk continued to be market leaders, while Absolute and Summit bottled water have the second largest market share.
Operating expenses increased as Asia Brewery had to spend more on advertising and selling expenses due to the competitive environment in the carbonated beverage segment, and to promote the recently launched Vitamilk in returnable glass bottles. The company also had to book additional depreciation expenses from the new soymilk plant.
Tanduay Distillers’ net income for the nine-month period stood at P438 million, 35 percent lower than the previous year’s level. Liquor revenues rose by 22 percent year-on-year to P10.91 billion. Based on Nielsen estimates, Tanduay’s market share in the Visayas was at 62 percent as of end-Septembe while in Mindanao, it had a market share of 66 percent.
However, Tanduay’s revenues from ethanol were 24 percent lower to P1.44 billion, with a similar drop in sales volume in the nine-month period. Margins were also lower due to higher alcohol costs.
Eton Properties’ nine-month net income amounted to P246 million, slightly lower than P249 million year-on-year. Revenues were 25 percent lower to P1.66 billion with lower sales attributed to the change in strategy to focus on increasing its recurring income base. Revenues from leasing operations were 10 percent higher to reach P1.03 billion with the opening of 2,100 square meters of additional retail space in Eton Tower Makati and higher lease rates. Eton’s business process outsourcing (BPO) office buildings continue to enjoy full occupancy.
Eton has a number of ongoing projects meant to increase its leasing portfolio. These are Eton City Square in Laguna with 7,150 square meters (sqm)of gross leasable area (GLA); a community lifestyle development along Ortigas Extension in San Juan City, Metro Manila with a GLA of 1,300 sqm; the 5,000 sqm expansion of Centris Walk in Eton Centris in Quezon City; the fifth BPO building at Eton Centris with 37,000 sqm; and the 15,000 sqm retail and office component of WestEndSquare in Pasong Tamo, Makati. Eton currently has a leasing portfolio of 125,000 sqm of BPO office space and over 29,000 sqm of retail space.