LT Group Inc. has increased its capital spending to P10 billion this year, the bulk of which will be allotted to property development.
It calls on the next administration to heed the long standing petition to curb the rampant illicit trade of counterfeit and smuggled tobacco products.
On the sidelines of the firm’s stockholders’ meeting in Manila on Tuesday, Michael Tan, president of the Lucio Tan-led holding firm, said the money will fund expansion programs in the beverage sector, building construction and land acquisition for the property sector, and technology upgrades for the bank.
Specifically, Tan said P2 billion will be allotted to expand its popular soymilk product, Vitamilk, P1 billion for the banking software upgrade, and the remainder or about P7 billion to its property arm, Eton Property Philippines Inc.
This year’s capex is almost 18 percent higher than last year’s actual spending of P8.5 billion. The firm eyes new growth drivers to surpass last year’s P6.6-billion net income, up by more than 50 percent from P4.4 billion in 2014.
“Aside from strengthening our current brands and products, we are launching new ones, putting up new plants, expanding in new areas, and forging new partnerships,” Tan said.
Early this year, LTG announced a joint venture with Ayala Land Inc. for the development of a 35-hectare township spanning the cities of Pasig and Quezon.
Asia Brewery Inc. (ABI), on the other hand, has recently partnered with Heineken International to form AB HEINEKEN Philippines Inc., a strategic move to drive its beer brand portfolio to premium status.
Philippine National Bank (PNB) announced the acquisition by Allianz of a 51-percent stake in PNB Life Insurance Inc., which includes a 15-year bancassurance agreement.
“We will also increase the numbers of our ATMs [automated teller machines]by up to 1,000. We are focusing on countryside developments too. Since it used to be a government-owned bank, we have a large presence there and we want to expand it even more,” Tan said.
“We are optimistic that the new administration would curb the illicit trade of counterfeit and smuggled cigarettes. Our tobacco [industry]is easy to monitor because we are just few,” Tan noted.
He said that the group is ready to work closely with the incoming administration, specifically with the incoming new Finance Secretary and Bureau of Internal Revenue chief to fight illicit trade and increase tax , especially in the tobacco and alcohol sectors, adding that the government could recoup P10 to 15 billion from this illicit trade in tobacco products.
“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, Tan said Tanduay plans to improve earnings through new product offerings targeting the youth, and cost-efficiency measures like energy-saving initiatives that may also provide additional sources of revenues.
In the property sector, Eton Properties will be putting up more office buildings for business process outsourcing to expand its leasing portfolio.
In the first quarter of 2016, the LT Group’s net income rose by 40 percent to P2.23 billion, versus P1.59 billion in the same period last year.