Lucio Tan’s LT Group sets P10 billion capital spending in 2016

MANILA, Philippines – The conglomerate of tycoon Lucio Tan plans to spend about P10 billion this year to fund the expansion and upgrading of its beverage, property, and banking businesses.

LT Group Incorporated president Michael Tan said in a statement that they are looking at capital expenditures of about P10 billion this year.

According to Tan, the amount will fund expansion programs in the beverage sector, building construction and land acquisition for the property sector, as well as technology upgrades for banking.

“Aside from strengthening our current brands and products, we’re launching new ones, putting up new plants, expanding in new areas, and forging new partnerships,” he added.

Early this year, LT Group announced a joint venture with Ayala Land Incorporated for the development of a 35-hectare township spanning Pasig City and Quezon City.

Its subsidiary Asia Brewery Incorporated also partnered with Heineken International to form AB Heineken Philippines Incorporated, which will drive the premiumization of its beer brand portfolio.

Philippine National Bank (PNB), meanwhile, announced the acquisition by Allianz of a 51% stake in PNB Life Insurance Incorporated, which includes a 15-year bancassurance agreement.

Higher net income

LT Group has a generally positive outlook for 2016, as it eyes new growth drivers to surpass 2015’s P6.6 billion net income.

In the tobacco sector, Tan said there is much room for margin improvement when illicit trade is substantially reduced and a level playing field is achieved.

He is particularly optimistic with the entry of President-elect Rodrigo Duterte, who promised an ironclad leadership style and zero tolerance for crime and corruption.

“We’re ready to work closely with incoming President Duterte’s handpicked finance team led by incoming Secretary Carlos Dominguez to fight illicit trade and increase tax collection especially in the tobacco and alcohol sectors,” Tan said.

“We’re still advocating for the 24/7 closed circuit TV surveillance and third party monitoring of all cigarette factories to plug revenue loopholes,” he added.

On distilled spirits, he said Tanduay plans to improve earnings through new product offerings targeting the youth and cost-efficiency measures like energy-saving initiatives.

LT Group’s unit Eton Properties Philippines will also be putting up more BPO office buildings to expand its leasing portfolio, Tan said.

In the first quarter of 2016, LT Group saw its net income surge by 40% to P2.23 billion, from P1.59 billion in the same period a year ago.

All of LT Group’s businesses reported growth in their earnings in the first quarter of 2016. – Rappler.com