Emperador allots P1B to buy back its own shares

Tycoon Andrew Tan-led liquor-maker Emperador Inc. has set aside P1 billion for a fresh stock buyback program that is expected to be completed this year.

Emperador’s board authorized the buyback program “to enhance shareholder value” under certain terms and conditions, the company disclosed to the Philippine Stock Exchange (PSE) on Tuesday.

Apart from creating demand for its own shares, stock buybacks benefit shareholders in the form of higher dividends, given that the reduction of shares results in the distribution of earnings to fewer shareholders.

The buyback program started on April 12 and will end on Dec. 31 this year. The actual number of shares to be repurchased cannot yet be determined as this will depend on the market price.

Emperador, which has been buying back its own shares from the open market since 2017, has so far lodged 404.2 million shares in its treasury, or about 2.5 percent of total issued shares. At Tuesday’s closing price of P10.50 per share, this is valued at P4.24 billion.In the future, the company can opt to place out these treasury shares, improve trading liquidity and generate fresh funds.

The buyback program will be executed in the open market through the trading facilities of the PSE.

“The buyback program shall be implemented in an orderly manner and should not adversely affect the company’s and its subsidiaries’ prospective and existing projects,” Emperador said.

“The company has sufficient retained earnings to support the buyback program,” the company added.Emperador—one of the few companies in the main-share PSE index that has bucked the earnings downturn caused by the coronavirus pandemic—is currently valued by the stock market at around P164.72 billion.

The company’s 2020 attributable net profit rose by 18 percent to P8 billion, the highest in its history, on the back of offshore sales of whisky products. Emperador’s revenues for the full year amounted to P52.6 billion, up by 4.6 percent from 2019, when COVID-19 had yet to wreak havoc on most businesses across the globe.

While liquor is not an essential item for consumers, this has been a surprising outperformer during the pandemic. inq