Earnings of Lucio Tan-led conglomerate surge in Q1

By Denise A. Valdez, Reporter

LT Group, Inc. reported a 41% surge in profits in the first quarter, lifted by growth in its tobacco and property segments.

The listed conglomerate of tycoon Lucio C. Tan posted a attributable net income of P6.21 billion in the three-month period, up from P4.42 billion during the same period last year. Total revenues climbed 15% to P25.22 billion.

By business segment, the tobacco arm accounted for 80% of LTG’s earnings at P4.99 billion. Banking unit Philippine National Bank (PNB) contributed P761 million or 12%, while Tanduay Distillers, Inc. (TDI) accounted for P199 million or 3%. Property segment Eton Properties Philippines, Inc. added P168 million or 3%; and beverage arm Asia Brewery, Inc. (ABI) pitched in P74 million or 1%.

The remaining 1% is from LT Group’s 30.9% stake in Victorias Milling Co., Inc., which contributed P91 million to the company’s total attributable income.

The tobacco firm’s earnings surged 76% to P5 billion, owing to the higher share of premium Marlboro and an increase in prices since late August 2019. Volume dropped 9% in the three months, which LT Group warned may keep plummeting due to the government’s higher excise tax on tobacco.

“(LT Group) is not against tax increases, but believes that the hikes should be moderate. Continual price increases to pass on higher excise taxes may result in further volume drops,” it said.

PNB generated a net income of P1.37 billion during the period, 30% lower from the first quarter of 2019. Provisions for credit losses expanded to P3.36 billion from P346 million last year as it anticipated an economic decline due to the on-going coronavirus pandemic.

Tanduay’s net income fell 15% to P199 million, as higher alcohol costs resulted in lower margins for the company. A 4% drop in volume was offset by the price increase per case in January, which resulted in a 9% increase in revenues from the liquor segment. However, revenues from the bioethanol segment fell 8% due to lower volumes and selling prices.

Property arm Eton posted a 13% profit increase to P169 million, which it traced to an increase in rental income and improvement in gross profit margins for real estate sales. The company currently has 181,000 square meters of office space for lease and 43,000 square meters of retail space.

ABI, which produces products such as Cobra energy drink, Vitamilk soymilk and Absolute and Summit bottled water, saw a 10% decline in net income to P74 million. It said some equitized loss in a joint venture dragged its bottomline as revenues were flat during the period.

As the Philippines continues to face the coronavirus pandemic, LT Group said it is confident in the strength of its balance sheet, as its debt-to-equity ratio was at 3.86:1 with the bank and at 0.16:1 without the bank.

Shares in LT Group at the stock exchange ended flat on Friday’s trading at P7.18 apiece.