LT Group, Inc. (LTG) posted a net income of P10.83 billion in 2017, higher by 15% compared with P9.39 billion in the earlier year, with its banking unit accounting for nearly half of earnings, the listed holding firm told the stock exchange on Friday.

Philippine National Bank (PNB) accounted for P4.83 billion of the attributable income, or 45% of the total, while the tobacco business, 40% or P4.39 billion.

Tanduay Distillers, Inc. contributed P631 million or 6%, while Asia Brewery, Inc. made up P551 million or 5%. Eton Properties Philippines, Inc. accounted for P348 million or 3%, while Victorias Milling Co., Inc., where the firm has a 30.9% stake, provided P174 million or 2%.

“LTG’s balance sheet remains strong,” the listed conglomerate said.

As of end-2017, the cash balance of the parent firm stood at P1.6 billion, with the debt-to-equity ratio at 3.70:1 with PNB, and 0.15: 1 without the banking unit.

In particular, PNB recorded a net income of P8.56 billion, up 16% from P7.38 billion a year earlier.

The income growth was attributed to higher net interest income, net service fee income and higher gain from the sale of real and other properties acquired (ROPA) at P4.16 billion, up 62% from P2.56 billion 2016.

Net interest income increased by 13% to P22.07 billion on the back of a 17% growth in loans and receivables. Net service fees and commission income rose by 20% to P3.2 billion from P2.66 billion because of higher loan, remittance and deposit-related fees.

Other income slipped by 7% to P8.62 billion from P9.29 billion after the decline in trading and foreign exchange gains, which was partly offset by higher gains from ROPA sale.

The tobacco business recorded an income of P4.4 billion, while equity in net earnings from the 49.6% stake in PMFTC, Inc. reached P4.37 billion. The higher earnings resulted from “better pricing and improved mix,” the company said.

In November 2016, PMFTC raised the price of the Marlboro brand, the first time it did so since 2013.

“The industry’s total volume was estimated to have decreased by 6% to 74.9 billion sticks, largely due to excise tax driven price increases, tempered by trade loading towards the end of 2017, in anticipation of more price increases as the excise tax was further increased starting 2018,” the company said.

Tanduay Distillers recorded a 31% decline in net income last year to P631 million from P908 million previously.

Liquor revenues were up 20% to P15.19 billion, with the unit cornering a market share of 61% in the Visayas and 65% in Mindanao, based on Nielsen estimates.

However, revenues from ethanol dropped 31% to P1.6 billion as volume fell 21% coupled by lower selling prices.

Asia Brewery also recorded lower net income at P552 million, down 69% from P1.76 billion in 2016, “primarily due to higher spending on new products,” the company said.

It said the 2016 income included P594 million in extraordinary income arising from the gain after the revaluation of the beer assets.

The lower profit came despite a 17% increase in revenues to P13.89 billion from P11.85 billion, with the higher contribution from bottled water, soymilk and packaging partly offset by the decline from energy drinks.

LTG said the unit’s Cobra Energy Drink and Vitamilk soymilk continued to lead the market, while Absolute and Summit bottled water had the “second-largest” market share.

The firm said operating expenses were higher because of increased spending 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.”

Asia Brewery also had to book additional depreciation expenses from the new soymilk plant, the group said.

Property unit Eton also reported a decline in its net income by 11% to P348 million from P390 million as revenues dropped by 21% to P2.23 billion, with sales slipping after the unit’s change in strategy to focus on increasing its recurring income base.

Leasing revenues rose 9% to P1.39 billion with the opening of 2,100 square meters of additional retail space in Eton Tower Makati and higher lease rates.

“Eton’s BPO (business process outsourcing) office buildings had a take-up rate of 99% as of end-2017,” the company said.

Shares in LTG on Friday dropped 1.51% to close at P19.60 each. — Victor V. Saulon

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