Tanduay eyes 10% rise in sales volume this year

MANILA, Philippines - Tanduay Holdings Inc. is projecting a 10-percent rise in sales volume this year, mainly due to an anticipated increase in consumer spending.

On the sidelines of the company’s annual shareholders meeting yesterday, Tanduay president and chief operating officer Wilson Young said sales are forecast to improve this year on the back of new product offerings. The company just launched two new “extra strong drinks”, targeting the upper market.

For the rest of the year, the company plans to launch four more new products, including ladies’ drinks as part of a strategy to cater to a wider clientele. Young said the company expects to produce 40,000 cases of the “Extra Stron” drinks per year.

Last year, Tanduay reported a 72-percent jump in consolidated net earnings to P573 million. Net sales rose 13 percent to P10.2 billion even though sales volume increased by only three percent.

The sales growth was attributed to an increase in selling prices by an average of 10 percent in 2009.

Cost of goods sold increased at a slower rate of 10 percent thus enabling gross profit rate to improve from 16 percent to 18 percent. The increase in cost is primarily due to the eight percent increase in excise tax, higher cost of alcohol, packaging materials and manufacturing overhead.

Interest expense went up by seven percent due to the short-term loans availed during the period. An impairment loss on property, plant and equipment amounting to P50.6 million was also recorded as a result of the temporary shutdown of Asian Alcohol Corp.’s operations.

There was also a drop in foreign exchange gain by 105 percent as

the exchange rates did not significantly fluctuate in the current period compared to the previous year.

Total operating expenses grew 10 percent on account of higher selling expenses which increased by 11 percent and general and administrative expenses which expanded by eight percent.

The increase in selling expenses was due to higher advertising and promotion expenses as a result of Tanduay’s ongoing activities in celebration of its 155-year anniversary in 2009.

Its unit Tanduay Distillers Inc. (TDI) is looking at a net income of P500 million last year on revenues of P10 billion to P11 billion.

TDI controls over 95 percent of the local rum market and is the second largest seller of rum in the world next to Bacardi of Puerto Rico. It operates four liquor-bottling plants with a total capacity of about 120,800 cases per day and operates two distillation plants.

TDI is spending P100 million to put up a new bottling line in Cabuyao, Laguna which would have a capacity of 20,000 cases a day or 600,000 a year. This move is in line with plans to move its Quiapo facility to Cabuyao as it converts the former to a marketing sales office.