LTG nets P23B

LUCIO Tan

Tycoon Lucio Tan-led conglomerate LT Group Inc. grew its 2019 net profit by 43 percent to P23.12 billion, the highest bottomline posted by the group since its stock market debut seven years ago.

The higher earnings were driven mostly by the tobacco and property development businesses.

The tobacco business accounted for 67 percent of total attributable income. Philippine National Bank (PNB) contributed 24 percent while Eton Properties Philippines Inc. had a share of 4 percent. Tanduay Distillers Inc. (TDI) and Asia Brewery Inc. (ABI) accounted for 3 percent and 2 percent, respectively, while LTG’s 30.9-percent stake in Victorias Milling Company Inc. accounted for 1 percent of the attributable income.

LTG’s tobacco business reported a net income of P15.56 billion last year, up by 78 percent in the previous year. Equity in net earnings from LTG’s 49.6 percent stake in PMFTC, the joint venture with Philip Morris, amounted to P15.4 billion, up by 82 percent due to the higher share of premium Marlboro as well as the price increases implemented in late August 2019. However, volume declined by 3 percent in 2019.

On July 25, 2019, President Duterte signed Republic Act (RA) 11346 which increased further the excise tax on tobacco starting January 2020. From P35 per pack in 2019, it increased to P45 per pack in 2020, increasing by P5 per pack annually from 2021 to 2023, then increasing by 5 percent annually thereafter.

“LTG is not against tax increases, but believes that the hikes should be moderate. Continual price increases to pass on higher excise taxes may result in further volume drops,” LTG said.

The industry’s volume was estimated at 108.9 billion sticks in 2012 and declined by 35 percent to an estimated 70.5 billion sticks in 2019.

Property arm Eton reported a net income P900 million last year, 88 percent higher than the previous year. Total revenues fell by 2 percent, but higher margins on real estate sales unlocked higher income.

PNB’s net income declined by 2 percent last year to P9.94 billion in the absence of large gains from asset sales that boosted earnings in the previous year. Excluding one-off items, core income amounted to P9.51 billion in 2019, 61 percent better than the previous year, due to higher lending activities and margins, alongside robust fee-based and treasury businesses.

TDI’s net income for 2019 was P676 million, 26 percent lower than the previous year, due to slightly lower margins from higher alcohol costs and higher interest expenses.

ABI’s net income for 2019 declined by 5 percent to P398 million. Revenues increased by 9 percent due to higher volumes of energy drinks, bottled water and soymilk. However, operating expenses were 10 percent higher as the company spent more on advertising and promotions.