Tanduay posts 4-fold profit increase in first quarter

Manila, Philippines - Hard liquor maker Tanduay Holdings Inc. reported a four-fold jump in net earnings in the first quarter this year on the back of a 20-percent hike in sales volume, adding that it expects this positive trend to continue with profits seen hitting P1.2 billion by yearend.

On the sidelines of the company’s annual stockholders’ meeting late Wednesday, Tanduay president Wilson T. Young said the company is upbeat on its prospects this year as it anticipates higher demand.

Last year, Tanduay earned P645 million on revenues of P11.5 billion. It expects revenues to rise 20 percent this year to P13.8 billion as sales volume is seen to increase 15 percent to 20.39 million cases.

For the period January to March 2011, Tanduay chalked in a net income of P208 million, mainly due to higher volume and a seven-percent improvement in average selling prices, said chief finance officer Nestor Mendones.

The group’s traditional best-sellers – Tanduay Five Years, Tanduay ESQ, Rhum G5, Gin Kapitan and Cossack Blue – are expected to boost sales.

The company also expects to derive additional sales from new products like the T5 Light, T5 Extra Strong, Embassy Whiskey and the newly-launched Boracay Rhum which is experiencing favorable acceptance from consumers.

Mendones said revenues grew 30.22 percent in the first quarter to P2.93 billion as sales volume expanded 21 percent to 4.7 million cases compared with 3.87 million cases a year earlier.

To further boost sales, Tanduay has earmarked P1.5 billion for capital expenditures in the next two years to upgrade and expand distillation and bottling facilities. It is beefing up the capacity of its nine-hectare distilling plant in Batangas to 150,000 liters from the current 100,000 liters per day, Young said.

He said the company is also repairing its plant in Cabuyao, Laguna which had been gutted by fire in October 2008. The facility used to produce 30,000 cases per day.

Funding for the firm’s capex will come from internally-generated cash, Young said.

He said the company is also contemplating on either selling shares through a private placement or a public offering to comply with the local bourse’s minimum 10 percent public float. Its public float currently stands at a mere three percent.

Tanduay has until November this year to meet that requirement.

Unit Tanduay Distillers Inc. claims to control over 95 percent of the local rum market in Visayas and Mindanao, which account for 47 percent and 38 percent of sales, respectively. It further claims to be the second largest seller of rum in the world, next to Bacardi of Puerto Rico.