LT Group profit rises with bigger tobacco, property revenues

enablePagination: false
maxItemsPerPage: 10
maxPaginationLinks: 10

Metro Manila (CNN Philippines, August 13) — Billionaire Lucio Tan's LT Group, Inc. realized bigger profits for the first semester, boosted by stronger tobacco sales and property rentals.

In a disclosure, the diversified conglomerate said it netted ₱9.24 billion from January-June, three percent higher than the ₱8.96 billion it booked during the same period in 2018.

Its tobacco unit enjoyed a 20 percent income boost, netting ₱5.87 billion as of June given bigger profits from the company's 49.6 percent stake in the local cigarette manufacturing giant PMFTC, Inc.

"The improvement in earnings is largely attributed to the volume mix in favor of premium Marlboro, as well as the price increase of Fortune in December 2018," LT Group said in the disclosure filed on Tuesday.

The company also commended the national government for a more aggressive crackdown on smugglers and illicit cigarette factories, but flagged the need for "moderate" hikes in sin taxes. LT Group said that cigarette order volumes have plunged by a third from 109 billion sticks in 2012 to just 73 billion sticks last year.

A new law signed by President Rodrigo Duterte raises the excise tax on cigarettes to ₱60 per pack by 2023, plus a perpetual five percent hike each year beginning 2024.

Meanwhile, the Philippine National Bank accounted for a fourth of the group's bottom line. The big bank made ₱4.05 billion as of June, 27 percent lower than what it made last year due to a one-off gains from the sale of assets.

Interest income grew by 13 percent as the lender granted more loans, alongside higher collection of service fees, commissions, and trading gains.

LT Group's subsidiaries Tanduay Distillers, Inc. and Asia Brewery, Inc. (ABI) also added ₱380 million and ₱244 million in profits during the first half.

Tanduay, the alcohol unit, suffered a 13 percent income decline due to higher operating costs, mainly for sales, even after it cornered a bigger share in the market at 29.8 percent. On the other hand, ABI saw its profit shoot up by 12 percent with higher sales of energy drinks, soy milk, and bottled water.

Tan's Eton Properties Philippines, Inc. also saw profits surge by 75 percent to ₱371 million, boosted by higher sales of residential units and additional rental fees.

The real estate firm opened Eton Square Ortigas during the semester, which added 2,062 square meters of gross leasable area. More office towers and condominiums are set to rise before the end of the year, which are expected to add to company revenues.

Shares at LT Group rose by 1.41 percent to close at ₱14.40 apiece on Tuesday afternoon.