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Lucio Tan firm sets P7-billion capex, takes ‘guarded’ outlook

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Eton-Centris along EDSA — LTG.COM.PH

By Denise A. Valdez, Reporter

LUCIO C. TAN’s LT Group, Inc. is maintaining a P7-billion budget for capital expenditures (capex) this year while keeping a “guarded outlook” due to challenges posed by the coronavirus disease 2019 (COVID-19) pandemic.

In the company’s annual stockholders’ meeting held virtually Tuesday, LT Group President and Chief Operating Officer Michael G. Tan said the company expects the economic decline of the Philippines to weigh on all its business units.

LT Group is formed by Philippine National Bank (PNB); Tanduay Distillers, Inc.; Asia Brewery, Inc.; Eton Properties Philippines, Inc.; PMFTC, Inc.; Fortune Tobacco Corp.; and Victorias Milling Co., Inc.

“The government estimates that the economy will contract by 2% in 2020, but some economists expect a higher deceleration of 10–20%. With purchasing power affected, demand for consumer goods is expected to be weak, and will affect the sales volumes of the products of PMFTC, Tanduay and Asia Brewery,” Mr. Tan said.

“Eton will also be affected as some tenants may end their lease contracts. PNB will have to grapple with non-performing loans and slower demand for loans,” he added.

“With the COVID-19 pandemic, we have a guarded outlook for 2020.”

LT Group posted a 41% earnings hike to P6.21 billion in the first quarter due to higher tobacco prices and rental rates. The tobacco business contributed P4.99 billion, PNB added P761 million, Tanduay accounted for P199 million, Eton added P168 million, Asia Brewery pitched in P74 million, and Victorias Milling contributed P91 million.

But Mr. Tan said the first quarter results only started seeing the impact of the pandemic in the latter part of March; the full impact is to be reflected in the coming months, especially in the second quarter.

“We cannot fully predict what the impact will be, as we adjust to the various permutations of [lockdowns] in the different parts of the country. (But) 2019 showed the good foundation of our company which we hope will help us weather this storm,” he told BusinessWorld after the stockholders’ meeting.

“Total capex for the group’s subsidiaries was P7 billion in 2019. Capex for this year should be around the same amount as there are no expansion plans in the pipeline,” Mr. Tan added.

LT Group is maintaining a debt-to-equity ratio of 3.86:1 with the bank and 0.16:1 without the bank as of end-March.

Shares in LT Group at the stock exchange ended at P8 each on Tuesday, up 10 centavos or 1.27% from the previous day.





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