Duty Free Phils nets P560M in 2004, to reassume role as major fund source for tourism projects

State-owned Duty Free Philippines (DFP) achieved a net income of P560 million last year, an 11-percent increase from 2003 and the largest since present management assumed office in 2001.

DFP General Manager Michael Kho said yesterday the return of DFP to financial viability and profitability following successive years of losses augurs well for the company to re-assume its mandate to provide enough funding for the country’s tourism programs and projects. Under Executive Order No. 46 which created DFP in 1987, DFP is mandated to remit its earnings to the Department of Tourism (DoT) – its parent organization – for tourism development purposes.

Kho said the DFP under his administration marked P403.5 million in net income in 2001, P528 million in 2002, and P503 million in 2003.

Prior to Kho’s term, DFP suffered successive years of losses with P535 million in losses in 1997, P1.151 billion in 1998, P205 million in 1999, and P212 million in 2000.

Kho attributed the turnaround to the vigorous restructuring programs undertaken by the company to cut operating costs, trim inventory carry costs, and deploy DFP funds to more productive use. These included non-personnel related cost-cutting measures, rationalization of merchandise procurement, and fine-tuning of operating procedures to cut wastage and boost efficiency.

Meanwhile, DFP returned to profitability with persistent suppliers‚ negotiations to further improve margins and increase efficiency in inventory turnover; renew credit lines at lower cost, reduce bank interests and charges, and restructure heavy debt burden with major creditors which was accumulated in previous administrations.

DFP also strove to make prompt payments to suppliers and contractors resulting in rebates and made efficient purchases of supplies through a regular and transparent procurement program.

Kho noted that the state-owned duty free operator managed a respectable eight-percent increase in sales last year to $142 million from $132 million in 2003, the first time it experienced revenues growth since 1995 due to its heightened strategic marketing efforts. These included its Peso Power Promo, Raffle Promos, Discount Promotions, and Instant Gratification and prices and gifts with purchases promotions.

DFP also embarked on store relay-outs and refurbishment of airport stores to improve store flow, develop image corners and upgrade facilities at par with international retail standards, further expansion of product specialty sections to address the evolving preferences of the discerning international traveler, and expansion of the wine category and development of a specialty liquor boutique for this important category. –Marianne Go