Tanduay profit up 55% to P582M in 9 months

Tanduay Holdings Inc., the liquor unit of tobacco and beer magnate Lucio Tan, posted a net income of P582 million in the nine months ending September this year, up 55 percent from the previous year’s P377 million, helped by higher selling prices and better product mix.

Consolidated net sales reached P5.3 billion or an increase of 13 percent from the year ago level of P4.7 billion. Sales volume was 11.1 million cases, partly as the same level as last year, partly as the high inflation rate caused by the increase in fuel prices has resulted in a weakening consumer demand.

Sales of the flagship brand – Tanduay Five Years Rhum – maintained a steady growth and continued to dominate sales in the Visayas-Mindanao area. Other categories like brandy and gin, however, did not perform as expected in view of strong competition in the Luzon area.

Cost of sales increased by 10 percent on account of the increase in minimum wage rates, inflationary adjustments on most expense items and higher advertising expenses. The liquor subsidiary launched "under-the-cap" promotions for the Five Years brand, Cossack Vodka and Guerrero Brandy and sustained an aggressive media plan.

As of end-September this year, Tanduay’s consolidated assets stood at P9.2 billion, 27- percent higher than the P7.3 billion in 2004.

Inventories decreased by 10 percent primarily due to a reduction in alcohol inventory. The level of aged inventory is being rationalized in view of the increase in price of raw alcohol and the excise tax rate. Alcohol prices are currently on an upward trend due to the abnormally high cost of molasses as local traders capitalized on the increase in demand in the world market.

Last September, Tanduay declared dividends of P3 per share totaling P1.8 billion in favor of the company. It also declared cash dividends of 60 centavos per share.

Tanduay also availed during the period under review a total of P2.95 billion loans from its existing credit lines with various local banks to fund corporate projects and working capital requirements.