Lucio Tan group spending P10B in 2015

MANILA, Philippines – The LT Group Incorporated, the listed holding company of tycoon Lucio Tan is spending close to P10 billion ($221.72 million) in capital expenditures this year, as it remains optimistic despite the continued challenges affecting its cigarettes and beer businesses.

Speaking on the sidelines of the company’s annual shareholders meeting Tuesday, June 23, LT Group President Michael Tan said the proliferation of illicit cigarettes dragged the conglomerate’s financial performance for the past two years.

LT Group is conducting its tobacco business through Philip Morris Fortune Tobacco Corporation (PMFTC), Incorporated (the combination of Philip Morris Philippines Manufacturing Incorporated and Fortune Tobacco Corporation).

“We have seen positive developments so hopefully we can turn it into positive results,” Tan said.

Tan said the problems of the tobacco business have not been resolved, but recent developments point toward a more positive outlook that will hopefully lead toward a level playing field, and enable PMFTC to improve its earnings.

“We’re happy that there is progress with the implementation of tax stamp and increased monitoring,” Tan said.

Competition in the distilled spirits business also continues to be intense, aggravated by higher raw material costs. But a more focused marketing strategy backed by intensified selling activities will help grow volumes and boost the profitability of Tanduay Distillers, Incorporated, Tan noted.

In the beverage segment, the conglomerate said the group is facing even tougher competition with the entry of more foreign brands. 

LT Group said Asia Brewery Incorporated will continue to capitalize on the growing young adult population and the higher purchasing power in specific segments to meet the changes in consumer preferences through product innovation, while continuing its program toward cost improvement.

For its property business under Eton Properties Philippines, Incorporated, Tan said the company will remain cautious and selective, as it continues to develop existing projects as well as leasing business.

“Eton is aware of the possibility of overheating in some segments of the residential sector, and is mitigating the risk by increasing its recurring income base, although at a gradual pace,” LT Group said. (READ: Eton Properties to spend P28 billion over the next 5 years)

But overall, LT Group is optimistic that 2015 will be better than the previous year.

“The economy is still growing at 6% and i think we are in the areas and businesses where we can take advantage of that growth,” Tan said. – Rappler.com