Inflation, smuggled cigarettes hurt LT Group’s bottom line

Tycoon Lucio Tan’s LT Group Inc. saw lower profits during the first nine months of the year as higher selling prices hurt its tobacco business.

From January to September this year, net income slipped 6 percent to P19.25 billion versus P20.4 billion during the same period last year.

The company’s tobacco segment via PMFTC Inc., the Philippine affiliate of Philip Morris International, saw profits drop 25 percent to P9.06 billion during the first nine months of the year amid a sharp drop in volumes.

“The industry’s volume was 20 percent lower year-on-year in [the first nine months of 2023] at 32.2 billion sticks, largely due to the industry-wide price increase in [first quarter of 2023], increasing illicit incidence and trade inventory movements,” LT Group said.

Tobacco accounts for 47 percent of LT Group’s earnings, followed by Philippine National Bank at 40 percent.

During the nine-month period, PNB’s net profit rose 18 percent to P13.52 billion. This included a P3.72 billion gain from the sale of repossessed assets.

Loans and receivables were down 1.6 percent to P611 billion as of September this year, while net interest margin improved from 3.3 percent to 4 percent. As a result, net interest income jumped 23 percent to P33 billion.

PNB’s contribution

Meanwhile, the bank booked higher provisions of P5.15 billion versus P714 million during the period last year.

Hard liquor arm Tanduay Distillers booked P1.15 billion and recorded a 34 percent net income surge to P1.15 billion despite lower volumes.

Asia Brewery posted a 5 percent profit increase to P449 million, while revenues rose 3 percent to P12.8 billion on the back of higher volume for bottled water and a previous price increase across product lines.

Real estate arm Eton Properties Philippines said net income during the nine-month period expanded by 4 percent to P347 million as leasing income hit P1.53 billion, up 17 percent.

“Eton currently has a leasing portfolio of around 288,000 square meters, of which close to 192,000 square meters is for office space,” LT Group said.

“Eton has resumed selling the remaining inventory of previously launched projects, in 68 Roces in Quezon City and in Eton City, Laguna,” it added. INQ