Alliance Global sees minimal income growth due to high spending, flat earnings

MANILA, Philippines – Alliance Global Group Incorporated (AGI) of billionaire Andrew Tan saw just a minimal increase in net income in 2016, after it significantly raised its spending level to expand its footprint around the globe and also reported flat earnings nearly across all businesses.

The holding company of Tan said its 2016 consolidated revenues stood flat at P139.7 billion, while reported net income climbed only 5% in 2016 to P22.8 billion from P21.7 billion in 2015.

"Since about 3 to 4 years ago, the Group has made a deliberate effort to significantly raise our level of spending to expand our geographic footprint both here and abroad, and ensure a more sustainable growth in future earnings," AGI president Kingson Sian told the Philippine Stock Exchange (PSE).

The conglomerate has investments in real estate, gaming, liquor, and fast-food, which all aggressively expanded in 2016 to sustain growth.

Megaworld Corporation, AGI's property unit, now has 22 mixed-use developments all over the Philippines, spanning around 3,700 hectares. 

Megaworld has expanded its office and commercial leasing businesses, contributing to about half of its operating profits, providing the company with earnings stability. 

Meanwhile, Emperador's flagship product, Emperador Brandy, is marketed in 51 countries, becoming a global brand. 

This followed the acquisition of Whyte and Mackay in 2014 and Bodegas Fundador in 2015, adding Scottish whisky brands and Spanish brandy products to the portfolio.

Travellers International's Resorts World Manila has maintained its position as a popular tourist destination with its diversified non-gaming amenities and entertainment offerings. Reflecting unrealized foreign exchange losses, it booked a 15% decline in net income to P3.4 billion last year, from P4.02 billion reported for 2015.

Golden Arches Development Corporation (GADC), which holds the exclusive franchise to operate McDonald's in the Philippines, aggressively expanded its stores nationwide, providing a significant boost to its profitability. (READ: Jollibee to continue stinging McDonald's despite labor issues)

In 2016, GADC posted a record level in revenues and profit of P22.6 billion and P1.2 billion, respectively. The robust growth in earnings was fueled by a 7% increase in systemwide same-store-sales growth, cost efficiencies, and ongoing store expansion.

The company ended the year with a total of 520 operating stores.

"Despite our aggressive expansion strategy, our balance sheet remains healthy and financial gearing still very comfortable, with much room to take on new opportunities that may come our way," Sian said. – Rappler.com