MANILA, Philippines - The investment vehicle of tycoon Lucio Tan was buoyed by the strong performance of its banking, property and beverage businesses in the first half.
In a disclosure, consumer-focused conglomerate LT Group Inc. said its consolidated net income surged 34.6 percent to P9.5 billion while core net income – which includes one-off items – gained 18 percent to P6.1 billion.
“The significant bottom line improvement was mainly driven by higher bank trading gains and increase in net income from the beverage and property sectors,†LT Group said.
“Improvements in banking, beverage and property sector incomes offset the weak performance of tobacco and alcohol products as the effects of the high excise tax increase in 2013 continue to affect sales volume,†it added.
Republic Act 10351 or the Sin Tax Law took effect on Jan. 1, imposing higher excise tax on tobacco and alcohol products that aims to increase the government’s revenues while discouraging heavy consumption of cigarettes, beer, liquor, wine, and other tobacco and alcohol products.
LT Group is into beer and beverage (Asia Brewery Inc.), distillery (Tanduay Distillers Inc.), real estate (Eton Properties Philippines Inc.), banking (Philippine National Bank) and tobacco (PMFTC Inc.).
Specifically, banking unit PNB doubled its income to P6 billion in the first half from P3.2 billion last year “on account of the 119 percent increase in trading gains as the country’s favorable economic environment provided numerous business opportunities for a robust trading and investment market,†LT Group said.
The beverage business’ net income rose 12 percent to P483 million due to lower operating and interest expenses. Asia Brewery’s revenues was flat in the first half as higher sales from bottled water, energy drinks and dairy products were offset by lower turnover of beer, alcopop and commercial glass.
Eton Properties said it turned around to a net income P204 million from a net loss of P33 million a year ago as revenues surged 161 percent in the first half. The property firm benefited from the higher completion percentages of its residential and condominium projects as well as higher leasing revenues from commercial projects.
However, distilled spirits revenues declined 15 percent due to a 25-percent drop in sales volume in the second quarter, which tempered the 10-percent increase in average selling prices.
“The decline in volume was due to the effects of the high increase in excise tax and intensified competitive pressure in Southern Philippines, which is the main market for rum products,†LT Group said.