LT Group sees better business in 2018

MANILA, Philippines — LT Group Inc., the listed conglomerate of taipan Lucio Tan, expects business to be better this year, but challenging for some of its consumer segments due to the depreciation of the peso and rising inflation.

 It has investments in banking through Philippine National Bank, tobacco through PMFTC, liquor through Tanduay Distillers Inc., beverage through Asia Brewery Inc. and property through Eton Properties Philippines Inc.

LTG expects its tobacco business to further improve this year.

“We are now operating on a level playing field which enables the company to pass on additional taxes and no longer price products at economically unsustainable levels. But there may be a further drop in volumes due to higher prices,” LTG president Michael Tan said during the company’ annual stockholders’ meeting.

In the past, PMFTC had to bring down prices because of illicit cigarette trade in the country, but Tan said the company remains vigilant against smugglers.

 “We’re still hopeful enforcement will continue and government will be able to put a lid on illicit trade,” Tan said in a briefing after the meeting.

 For LTG’s other businesses, the company expects tax on sugary drinks to negatively affect the sales volumes of its top-selling Cobra energy drink as prices were raised.

Tan said Cobra has the highest share of Asia Brewery’s revenues.

 Sales of its bottled water products, however, are expected to remain strong, he said.

Tanduay, meanwhile, is expected to remain stable even with higher excise taxes on distilled spirits.

Tan said demand would remain stable to slightly higher as more jobs are expected to be generated by the government’s Build Build Build program.

“Higher inflation is expected for 2018 which together with the depreciation of the peso and higher fuel costs will translate to higher production costs,” he said.

Moving forward,  the company is pouring in P10 billion for its capital expenditures this year, bulk of which will go to the construction of Eton’s office and commercial projects.