LT Group profit plunges 32% to P8.66 B in 2013

MANILA, Philippines - Lower income from the tobacco and rum businesses dragged down profits of tycoon Lucio Tan’s investment firm last year.

In a regulatory filing, LT Group Inc. said that on a pro-forma basis, its net income sank 32 percent to P8.66 billion in 2013 from P12.75 billion a year ago.

The difference between the actual and 2012 pro-forma income is the inclusion of LT Group’s shares in Philippine National Bank (PNB).

Revenues slipped 10 percent to P55.86 billion from P62.65 billion the previous year, LT Group said.

Tobacco business Philip Morris Fortune Tobacco Corp. (PMFTC) contributed P3.92 billion or 45 percent of total profits, followed by PNB at P3.43 billion or 40 percent, Asia Brewery Inc. (ABI) at P1.04 billion of 12 percent, Tanduay Distillers Inc. (TDI) at P185 million, and the balance coming from the property and other businesses.

LT Group said income from the tobacco business fell 43 percent from P6.9 billion in 2012 due to the imposition higher tobacco excise tax.

Sales volume hit 68.5 billion sticks last year, down 26 percent from 92.8 billion sticks a year earlier resulting in a drop in average market share to 79.3 percent from 90.7 percent.

“This was exacerbated by the illicit trade from a competitor who kept the price of low-end cigarettes at an economically unsustainable level of P1 per stick,” LT Group said.

Hence, many consumers shifted to cheaper cigarettes. PMFTC is the company behind cigarette brands Marlboro, Philip Morris, Hope, Fortune and Champion.

For the banking business, PNB’s unaudited income fell four percent to P6.2 billion last year, “largely due to the P875-million loss booked in the fourth quarter arising from the impact of Super Typhoon Yolanda to the general insurance business,” LT Group said.

Meanwhile, beer and beverage unit ABI said its income jumped 32.5 percent to P1.04 billion from P787 million a year ago.

“Revenues were flat at P13.4 billion, as the volume of some products were adversely affected by the price war among the more popular cola brands, as well as the increase in excise taxes for beer,” LT Group said.

ABI produces and sells Cobra, Tanduay Ice, Absolute and Summit beverage lines.

The rum business, through TDI, reported 82-percent decline in net income to P185 million from P1.02 billion. The bottom line is inclusive of a P105-million expense from the closure of the old production plant in Quiapo.

Revenues of TDI dropped 19 percent to P10.54 billion from P12.95 billion “brought about by a drop in sales volume due to the adverse effect of higher excise taxes and stiff competition,” LT Group said.

On the other hand, real estate unit Eton Properties more than doubled its earnings to P105 million from P47 million a year ago as revenues rose 36 percent to P3.65 billion from P2.68 billion due to the completion of ongoing residential projects.