LT Group allots P9.7 billion for capex

MANILA, Philippines — LT Group Inc. (LTG), the listed holding company of taipan Lucio Tan, is pouring in P9.7 billion in capital expenditures this year, a 94 percent jump from the P5 billion spent in 2020 on expectations of recovery.

Its president and COO Michael Tan is hoping for a better year.

“This year will be a tough one but hopefully better than 2020. It is an important step to get back what we once had,” Michael said during the company’s annual stockholders meeting yesterday.

The increase in capex will mainly go to PNB for its digitalization efforts (P4.6 billion), Eton as it accelerates construction activities (P2 billion), Tanduay (P1.5 billion) and Asia Brewery (P700 million). Eton’s joint venture with Ayala Land will get P1 billion.

The tycoon’s daughter, Karlu Tan-Say has been elected to the company’s board of directors as Tan’s brother Harry stepped down.

Michael thanked Harry for his “outstanding service and dedication to the company the past years.”

Completing the company’s board are chairman Lucio Tan, vice chairman Carmen Tan and directors Lucio Tan III, Vivienne Tan, Juanita Tan Lee, Johnip Cua, Mary Ng, Wilfrido Sanchez and Florencia Tarriela.

LTG reported an unaudited net income of P21 billion for 2020, down 9.1 percent. Its businesses are in banking through Philippine National Bank, tobacco through PMFTC, liquor through Tanduay Distillers Inc., property through Eton Properties Philippines Inc. and beverage through Asia Brewery Inc.

Tan said the company managed to remain profitable due to the contributions of the various companies.

Michael, for his part, said the enhanced community quarantine in Metro Manila starting late March which has since been downgraded to modified enhanced community quarantine, would impact the government’s projected GDP growth of between 6.5 percent and 7.5 percent for 2021.

This is still a reversal of the 9.5 percent contraction in 2020, he said.

“The country got off to a slow start in 2021, but with the vaccination program of the government underway and the private sector starting soon, hopefully, the economy can open up more as more people get inoculated, and businesses can operate at efficient levels and thereby provide more jobs,” Michael said.

LTG has secured enough vaccines for over 50,000 employees and service providers of the Lucio Tan Group of Companies.

Moving forward, LTG expects the demand for its consumer goods such as Tanduay and Asia Brewery to increase or at least remain steady.

The volume of PMFTC Inc.’s products might still be impacted, as price increases are needed to pass on the annual increase in excise taxes, the last of which was in October 2020.

Philippine National Bank will see more NPLs booked as Bayanihan 1 and 2 that provided a grace period for borrowers ended in 2020, but a better economy should pave the way for the need for more loans.

Eton Properties, with most of its leasing portfolio in office space, would not be as affected as other developers which are more reliant on retail space, Michael said.