Fall in LT Group''s Income from Tobacco Continues

Source from:  Business Mirror 05/18/2015

Income from tobacco during the first quarter of the year by LT Group Inc. continued its fall despite being able to stomp on the brake for the drop in income by the holding firm of the many businesses of tycoon Lucio Tan.

The company said in its report that its income reached P2.1 billion for the period. But this is still some P82 million lower than the P2.2 billion it earned last year.

The consolidated net income attributable to equity holders of the company was flat at P1.6 billion.

Income from its tobacco segment, which owns half of Philip Morris Philippines Manufacturing Inc. (PMFTC) , further dropped to P409 million, or 29 percent lower from last year's P576 million.

PMFTC, the combined firm of Tan's Fortune Tobacco and Philip Morris Philippines, corners most of the cigarette market in the country, which, at one time, reached more than 90 percent. That market share, however, has been eroded in just months after the passage of a new "sin" tax law, in which the company blamed illicit trade of cigarette products. "PMFTC has been able to stabilize its market share at over 70 percent despite the illicit trade in cigarettes," the company said.

"The drop in the tobacco segment's net income was offset by the improvement in the operating results of the other four segments," it added.

Last month Philip Morris International Inc. (PMII) said its shipment volume to the Philippines of 15.9 billion units decreased by 1.6 percent in the first quarter, "primarily due to declines of PMII's low and super-low price brands, partially offset by growth of Marlboro, reflecting the positive impact of retail-price increases at the bottom end of the market that narrowed price gaps."

PMII brands' Philippines market share

PMII said the share decline of "Others" was principally due to super-low price Champion brand, down by 2.3 points to 2.3 percent.

"In the Philippines, the estimated total tax-paid industry cigarette volume increased by 1 percent to 18.9 billion units, primarily reflecting higher estimated duty-paid volume by PMII's principal domestic competitor," the company said in a statement issued on April 16.

Aside from tobacco, LT Group's income has been slowing down partly as a result of lower trading gains from its banking unit. Its last year's income, for instance, was cut by more than half to P4.2 billion from P8.7 billion.

The distilled spirits segment realized an income of P75 million for the quarter, a reversal of the P11-million net loss reported last year.

Income of the beverage and property development segments have also increased by P38 million and P22 million, respectively. LT Group's share in net income for the banking segment improved slightly to P754 million from P747 million last year.

Consolidated revenues amounted to P13.1 billion for the quarter, a mere 2 percent higher than the P12.9 billion recognized in 2014, on account of the increased revenues in the beverage and property development segment.

Cost of sales increased slightly by 1 percent to P6.2 billion, primarily attributable to higher cost of sales of the beverage segment, mainly due to the effect of higher excise taxes and raw material costs.

The property development segment, Eton Properties, reported a 12-percent decline in cost of sales as a result of lower booked sales from real-estate development projects.

Banking unit Philippine National Bank reported a flat net income at P1.4 billion, quarter-on-quarter, as interest income from banking operations was at P5.2 billion in 2015, 3 percent lower than the P5.4 billion earned last year.　Asia Brewery Inc.'s net income grew by 14 percent, to P301 million for the quarter from P263 million last year, as revenues of the beverage segment were higher by 4 percent to P3.5 billion in 2015 from P3.4 billion last year. Its energy-drink brand accounts for the biggest share of revenues at close to 35 percent with over 70 percent market share, while revenues from all other products were all higher year-on-year. On the other hand, Tanduay Distillers Inc. continued to increase marketing efforts to improve sales especially on its flagship product, but net revenues were still flat at P3 billion. Enditem