LT Group Inc. (LTG), the listed conglomerate of tycoon Lucio Tan, is programming an P8 billion to P9 billion spending budget this year, the bulk of which will go to its property business.
In a press briefing after the firm’s annual stockholders’ meeting on Tuesday, LTG president Michael G. Tan said P7.7 billion of the capital expenditures is going into its property business segment while the rest will finance its consumer beverage, liquor, and tobacco businesses.
The budget this year is slightly higher than the actual P7.4 billion in 2014.
The LTG president said the 2015 spending will be coming from both internal and external sources, but did not cite plans to raise funds via equity placement or the bond market.
Tan noted that Eton is at the start of an aggressive expansion program in the next three to five years to grow its commercial leasing portfolio via the construction of commercial mall centers and office buildings for the business process outsourcing (BPO) sector.
“For property, the momentum is to focus on leasing projects like BPO and commercial centers. We will add more BPO offices with an additional 100,000 square meters of leasing space,” Tan said.
From net loss of P6.47 billion last year, the company said it is retaining its “cautious optimistic” stance this year as it continues to sustain competitiveness and growth across all its businesses despite an ongoing fight to redeem its lost market share in the tobacco segment due to cheaper cigar products in the market.
Paul Riley, president of tobacco unit PMFTC Inc., said in the same briefing the group expects to regain some of its market share this year and beyond due to the positive enforcement of the tax stamps by the Bureau of Internal Revenue (BIR) in a bid to track down cheap tobacco sellers who are not paying the right excise taxes.
From a market share of around 90 percent, PMFTC saw its share drop to 72 percent.
For the liquor business, Tanduay Distillers Inc. is focusing on marketing strategies to boost sales in the face of a growing competition in the distilled spirits business from local and foreign players.
In the beverage segment, Tan said Asia Brewery Inc. (ABI) is “expanding the water capability” for the Absolute and Summit brands.
The soy milk plant for Vitamilk is expected to be completed in mid2016 in an effort to meet the market demand of which ABI has an 86 percent share.
Tan said ABI is “looking at exporting” soymilk to Thailand and exploring possibilities of “exporting manufacturing” operations in Southeast Asia as “manufacturing costs here in the Philippines are expensive.”
Banking arm Philippine National Bank (PNB) earlier said it seeks to grow its net income by more than 10 percent this year on the back of higher loans and deposits.
Long-term, Tan said the plan is to make PNB “one of the top three banks” in terms of assets. The LTG president said the target entails “acquisitions when opportunities arise” but did disclose any concrete move regarding mergers and acquisitions.
Asked if the group is making a bid for the government’s majority controlling stake in United Coconut Planters Bank (UCPB) in line with its acquisition plans, Tan said PNB is looking for “other quality acquisitions” to be made in the future.