PMFTC streamlining operations

MANILA, Philippines — PMFTC Inc., the partnership between Lucio Tan’s Fortune Tobacco Corp. and US cigarette giant Philip Morris, is streamlining its operations.

PMFTC will merge its subsidiary Philip Morris Manufacturing Philippines Inc. (PMPMI) into PMFTC, which will be the surviving corporation effective June 1, Tan’s listed LT Group Inc. said in a disclosure yesterday.

PMFTC is an indirect subsidiary of LTG.

PMFTC shareholders and board of directors approved the resolution regarding the merger in a meeting yesterday. The merger is subject to the approval of the Securities and Exchange Commission (SEC), the corporate regulator, LTG said.

“The merger is to streamline the corporate structure of Philip Morris International (PMI)’s business operations in the Philippines. PMPMI is one of PMFTC’s existing shareholders,” PMFTC said.

“The merger is part of an internal restructuring process and will not materially affect the operations, earnings and ownership of PMFTC Inc.,” PMFTC also said.

The cigarette business is one of LTG’s strongest businesses.

From January to September 2020, LTG posted a nine percent increase in its nine-month income to P16.10 billion compared to the P14.72 billion posted a year ago.

The tobacco business accounted for P12.12 billion or 75 percent of total attributable income.

The tobacco business had a net income of P12.17 billion during the nine-month period, up 27 percent, attributed to the higher share of premium Marlboro with customers shifting from mid-priced Fortune, as well as the price increases implemented in late August 2019.

LT Group’s businesses are tobacco through PMFTC; banking, through Philippine National Bank; tobacco through Tanduay Distillers Inc.; property through Eton Properties Philippines Inc. and beverage through Asia Brewery Inc.

The industry’s volume is estimated to have declined by 11 percent during the period due to the end-August 2019 price increase, coupled with the impact of the enhanced community quarantine implemented in Luzon starting March 17 and in other select cities thereafter up to end-May 2020.

Illicit activities have also been on the rise with a total of 150 machines seized from illegal factories during the nine- month period.

This is 70 more than the 80 machines seized in the same period last year.