LT Group Inc. (LTG), the holding firm of most businesses of tycoon Lucio Tan, said its income in January to September reached P9.95 billion, 38 percent lower than last year’s P16.1 billion.
The company said the decline is mainly due to the higher provisioning for credit losses booked by Philippine National Bank (PNB) and the elimination of the gain from the transfer of real estate assets at the consolidated level.
PNB had a negative net contribution of P5.2 billion after eliminating the gain of P33.6 billion at the consolidated LTG level.
The tobacco business accounted for P13.27 billion or 33 percent of the company’s total attributable income. Liquor maker Tanduay Distillers Inc. added P998 million, or 10 percent of total, Asia Brewery Inc. contributed P411 million while Eton Properties Philippines Inc. accounted for P366 million, around 4 percent of total. The company’s 30.9-percent stake in Victorias Milling Co. Inc. added P169 million or 2 percent of total.
Net expenses at the parent level amounted to P62 million.
Publicly-listed PNB reported a net income of P24.43 billion under the pooling method, inclusive of a P33.6-billion gain from the transfer of some properties into PNB Holdings Corp. However, at the consolidated LTG level, these gains were not recognized, which together with higher provisioning for credit losses resulted in a P5.21-billion loss contribution from PNB to LTG, the company said.
The tobacco business had a net income of P13.32 billion for the period, 9 percent more than last year’s P12.17 billion, despite falling volumes.
The company said the industry’s volume was estimated at 41.2 billion sticks for the nine months of the year, 12 percent lower than last year’s 47 billion sticks, primarily due to the impact of the Covid-19 pandemic and the various quarantine protocols on the purchasing power of consumers.
“Illicit activities have also been rising, which include smuggled and locally produced products,” the company said.
Under Republic Act 11346 which was signed in July 2019, the excise tax on tobacco was further increased. It is now being taxed at P50, from P35 per pack in 2019 to P45 per pack in 2020.
It will increase by P5 per pack annually in 2022 and 2023, then increase by 5 percent annually thereafter.
“LTG is not against tax increases, but believes that the hikes should be moderate. Continued price hikes to pass on higher excise taxes may result in further volume declines.”
Tanduay’s income for the period was at P1 billion, some P86 million or 8 percent lower than last year’s P1.09 billion. The lower income is due to lower margins due to higher production costs, higher operating expenses and lower selling prices for bioethanol.
As of end-September, the company’s nationwide market share for distilled spirits was at 29.9 percent, higher than last year’s 25.8 percent. In the Visayas and Mindanao regions where most of Tanduay’s sales are generated, market share was at 69.2 percent and 76.2 percent, respectively, as of September.
Asia Brewery’s net income for the period was at P411 million, a significant improvement from the P4 million reported last year.
The higher income is largely due to the absence of any losses from the AB Heineken joint venture as the partnership transitions starting 2021 to the engagement of the company to locally brew and distribute Heineken and Tiger beers in the country.
Revenues were slightly higher as the higher volume for Cobra Energy Drink was offset by the lower volume of Absolute and Summit bottled water and Vitamilk soymilk. The company’s on-the-go sales at convenience stores continue to be adversely affected by the various forms of lockdowns imposed since March 2020.
Eton’s net income for the period fell 42 percent to P367 million from last year’s P633 million, due to the decline in residential unit sales and lower leasing income.
Projects in the pipeline include Eton City Square 1, the 4.3-hectare neighborhood retail and commercial center in Sta. Rosa, Laguna which will add 7,000 square meters of net leasable area to Eton’s commercial leasing portfolio in phase 1. Another project is phase 2 of WestEnd Square in Makati which will have 23,000 square meters of net leasable area.
Eton currently has a leasing portfolio of around 181,000 square meters of office space and over 45,000 square meters of retail space.
In June, the company declared a P0.24 per share special cash dividend or a total of P2.6 billion and was paid in July. This brought total cash dividends declared in 2021 to P0.48 per share or P5.19 billion, equivalent to 24.7 percent of the company’s attributable net income.