ALLIANCE GLOBAL Group, Inc. (AGI) of billionaire Andrew L. Tan is setting aside a higher capital spending budget this year after some business units struggled last year.
AGI President Kingson U. Sian announced the holding firm is allocating P80 billion, higher than the P70 billion spent last year, to lay down the foundation for growth and “future-proof” its businesses, the company said in a disclosure to the stock exchange on Thursday.
Real estate arm Megaworld Corp. will secure 75% of the total for its development and investment property projects that will fuel healthy earnings growth moving forward, while Travellers Hotel Group, Inc. will corner 15% to fund the completion of the third phase of expansion in Newport City that will jack up hotel and gaming capacity.
AGI did not disclose where the remaining 10% of the capex will be invested.
“2017 has been a rather challenging year for the group but that never deterred us from pursuing our growth ambitions. As we move forward, we remain focused on investing in our future,” Mr. Sian was quoted in a statement as saying.
The increased level of spending comes on the heels of a flat performance in earnings last year with Alliance Global’s net income attributable to common shareholders reaching P14.9 billion. Including non-recurring items, net profit would have risen by 4% year on year to P15.2 billion.
Consolidated revenues inched up 1.5% to P141.8 billion from P139.7 billion on the back of the recovery in liquor sales and the strong results of the real estate and quick service restaurant segments that made up for the weakness in gaming and leisure operations.
Travellers was under pressure from the impact of a deadly attack in Resorts World Manila that led to the temporary closure of the integrated resort. As a result, gross revenues amounted to P21 billion, down 23% from the P27.49 billion reported back in 2016.
Higher cost of goods sold and marketing expenses coupled with unrealized foreign currency losses dragged liquor maker Emperador Distillers, Inc.’s net income to P6.3 billion last year from P7.69 billion in 2016.
Megaworld delivered a 13% growth in attributable net profit to P12.8 billion, driven by the 18% expansion in rental income from office buildings and lifestyle malls.
Golden Arches Development Corp., the exclusive franchise holder to operate McDonald’s in the Philippines, saw earnings jump 33% to P1.6 billion. Sales rose 12% to P25.5 billion boosted by the 5.8% rise in system-wide same-store-sales growth and store expansion.
At the close of 2017, McDonald’s was operating a network of 566 stores throughout the country, compared to the 520 stores in the previous year.
Shares in AGI added 30 centavos or 2.21% to close at P13.90 apiece on Thursday. — Krista Angela M. Montealegre
