Emperador Q1 net hit by liquor tax hike; sets capex to boost income

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Liquor manufacturer Emperador Inc. said its net income for the first quarter of 2015 fell to P1.4 billion from P1.7 billion a year earlier as an increase in liquor taxes this year cut into its margins.

Revenue grew 16 percent to P8.9 billion from P7.7 billion.

“The increase in liquor tax at the beginning of 2015 put some pressure on our margin,” Emperador President Winston S. Co said in a statement.

But the company said it will seek to double its net income by 2017 from the 2013 level by launching new products and expanding its operations with corresponding capital investment.


Profit target, capex
The product launches are in line with the company’s bid to double its net income to between P11 billion and P12 billion by 2017 from the P5.8 billion profit recorded in 2013.

Emperador will be spending P3 billion in capital expenditure (capex) intended for eight product launches lined up for this year.

“During the first quarter of this year, we opened our very first Emperador boutique at the Ninoy Aquino International Airport (NAIA) Terminal 3, where we [now]exclusively sell Emperador Deluxe Special Reserve brandy. And just last month, we launched Smirnoff Mule, catering to a new consumer class looking beyond the common fare. Consumer response is positive and exciting,” Co said.

Apart from the Smirnoff Mule, three more product labels from the Whyte and Mackay partnership are set for launch later, namely the Jura, Dalmore and Whyte & Mackay. The four new items are a part of the eight products in the pipeline for launch in 2015.

Expansion, acquisition
Emperador will also build a P300-million glass manufacturing facility in Canlubang – slated for construction early next year — to produce its own amber glass bottles for Smirnoff Mule. The company presently imports the bottles for the Mule.

The company is also bidding for the acquisition of French cognac producer Louis Royer SAS, Emperador Director Kingson Sian said earlier. He declined to give a figure for Emperador’s offer. In case the company wins the bid, he said, Emperador may tap the debt market to fund the acquisition.

Emperador is 87.55-percent owned by Andrew Tan’s holding firm, Alliance Global Group Inc. The group also has interests in property development (Megaworld Corp.); quick-service restaurants via McDonald’s franchise (Golden Arches Development Corp.); and integrated tourism development businesses via Resorts World Manila and Resorts World Bayshore (Travellers International Hotel Group Inc.).

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