Tobacco firm to close QC plant

The sole tobacco company listed at the Philippine Stock Exchange, Philippine Tobacco Flue-Curing and Redrying Corp., plans to mothball its plant in Quezon City as it prepares to spin off its line of business to improve its deteriorating balance sheet.

Corporate secretary Rafael Antonio Santos told the PSE the company has been losing money from its tobacco business in the past three years and "the corporation must get out of its traditional business to cut its losses."

He said the company’s equipment for its tobacco operations will be maintained on "mothballed" status. They will be maintained such that the corporation can immediately resume its tobacco operations as soon as its business prospects improve.

Formed in 1951 and listed four years later, Phil. Tobacco is engaged in the development and culture of flue-cured tobacco, maintaining a redrying plant in Balintawak and warehouses in Baesa. Its clients comprise the major cigarette manufacturers and sources its flue-cured Virginia tobacco from the Ilocos Region.

Over the past three years, however, the firm’s tobacco sales were not enough to cover expenses. In 1999, cost of sales exceeded tobacco sales by roughly P2 million. In the next two years, the gap between revenues and expenses grew, with sales in 2000 and 2001 registering at P126 million and P47 million, respectively, compared with expenses of P150 million in 2000 and P68 million last year.

"Last year, volume dropped so low that revenues were just a third of 2000’s. The situation is expected to worsen this year, prompting a decision to phase out the corporation’s tobacco operations," Santos added.

Santos said the company has earmarked P9 million to cover the separation of its 348 employees, 320 of which are seasonal workers. – Conrado Diaz Jr.