LTG cautious on 2020 business prospects
Tycoon Lucio Tan-led conglomerate LT Group Inc. (LTG) is bracing for a tougher period for its tobacco, liquor, property and banking businesses for the remainder of 2020, during which the domestic economy is expected to fall into a recession for the first time in over two decades.
“With purchasing power affected, demand for consumer goods is expected to be weak, and will affect the sales volumes of the products of PMFTC (Philip Morris Fortune Tobacco), Tanduay and Asia Brewery,” LTG president Michael Tan said during the company’s stockholders meeting on Tuesday.
The group’s property arm, Eton Properties, may also be affected as some tenants may end their lease contracts, Tan said.
On the banking business, Tan said Philippine National Bank (PNB) might “have to grapple with nonperforming loans and slower demand for loans.”
While government estimates showed that the economy might contract by 2 percent in 2020, some economists were projecting a higher deceleration of 10-20 percent, Tan noted.
Tan likewise noted that thousands of overseas Filipino workers have lost their jobs and thus had returned home as the COVID-19 pandemic likewise hit their host countries.
As such, Tan said the group’s outlook for 2020 was “guarded.”
In 2019, LTG’s attributable net income reached a record-high P23.12 billion, 43 percent up from year-ago level.
In the first quarter of 2020, LTG grew its net profit by 41 percent year-on-year to P6.21 billion, driven mostly by price increases in the tobacco business. Earnings from the banking, beer and hard liquor businesses faltered. The real estate business gained.
Tan said he was hoping that LTG’s strong 2019 results would give the conglomerate a strong foundation to weather the current crisis.
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