LEISURE conglomerate Alliance Global Group Inc. (AGI) posted a 5 percent year-on-year dip in net income for the first nine months of 2015, weighed down by weak earnings from its casino subsidiary.
Alliance Global traced the decline to a 30-percent drop in net gains posted by its unit, Travellers International Hotel Group Inc.
The group’s real estate business, however, helped limit the fall, with newly acquired Global Estate Resorts Inc. (GERI) registering a 67-percent jump in net income for the first three quarters of the year.
In a disclosure to the Philippine Stock Exchange (PSE) Friday, AGI, the publicly listed holding firm of tycoon Andrew Tan, said its net income for the first three quarters stood at P16.2 billion, down from the P17.1 billion it made a year ago.
The holding firm said all its subsidiaries performed well during the January-September period, except for Resorts World Manila operator Travellers International, which reported a net income drop to P2.8 billion from P4 billion a year earlier.
“The group’s financial performance continues to be compelling despite challenges faced by the gaming industry,” AGI president and chief operating officer Kingson U. Sian said in a statement.
AGI’s revenues rose 11.2 percent to P99.58 billion from P89.52 billion on improvements in the group’s business segments.
As for Travellers, gaming revenues contributed P17.9 billion, while hotel, F&B, and other revenues increased 6 percent to P1.7 billion from last year. Hotel occupancy remains strong with Maxims Manila Hotel, Remington Hotel and Marriott Hotel Manila registering an average occupancy rate of above 85 percent.
“Even as we continue to ramp up our expansion in Resorts World Manila simultaneously with the development of Westside City Resorts World, a P65 billion 31-hectare project at Entertainment City in Paranaque City, we remain profitable and confident of the prospects of the industry,” Sian said.
Despite the drop in Travellers, AGI’s property vehicle Megaworld Corp. recorded a 12.52-percent increase in net income to P8.35 billion from last year’s P7.42 billion. That excluded a one-time gain last year of P11.62-billion from the acquisition of Global-Estate Resorts Inc. and a partial sale of interests in Travellers.
“Our rental arm continues to show robust growth, which is underpinned by more office and commercial spaces,” noted Sian. “The rental income that we generated in the first nine months of this year is up 24 percent and is in line with our P9-billion target in 2015. We also continue to experience real estate sales expansion with an 11.5 percent increase during the first nine months of this year.”
Liquor manufacturer Emperador Inc. saw its net income improve by 3 percent to P4.7 billion.
“We are strengthening our product portfolio (for Emperador) in the domestic market with the addition of two exciting products – Andy Player whisky and Smirnoff Mule, a blend of vodka, ginger beer, and lime,” Sian disclosed.
Despite Travellers’ 30-percent net income drop, Sian said the business remains profitable, as ongoing expansions are in place at Resorts World Manila, particularly the new hotel rooms to be added by the Marriot West Wing by early next year.
“We will further add new hotels by 2017 – Hilton Manila Hotel, Sheraton Hotel Manila, and the new Maxims Hotel,” he said. “Additional gaming areas and retail space together with parking will also be built.”
Meanwhile, Golden Arches Development Corp. (GADC), the franchisee of McDonald’s in the Philippines, saw its net income increase 29 percent to P520 million, from P402 million a year ago.
The restaurant operator’s revenues climbed 10.5 percent to P14.85 billion from P13.43 billion last year.
The boost came from the revenue streams of 40 newly opened stores, 33 renovated stores, and aggressive advertising of new products and products within limited time offers.
Earlier, AGI announced its three-year budget of P200 billion from internally generated funds to expand its businesses toward 2018.
Out of the P200 billion capital expenditure, a total of P96.7 billion was budgeted for this year: P65 billion for Megaworld Corp., P8 billion for Travellers, P21 billion for Emperador Inc., and P2.7 billion for GADC.
Moving forward, Megaworld plans to grow its township projects toward the regions and raising townships to 20 this year from 15 last year.
Megaworld’s subsidiary GERI posted a 67-percent net income increase for the first nine months of the year to P534 million from P320 million last year, on the back of strong real estate sales, especially in its projects Alabang West in Las Pinas City and Boracay Newcoast in tourist spot Boracay.
GERI said real estate sales for the first nine months more than doubled year-on-year to P3 billion from P1.47 billion last year.
Travellers, meanwhile, intends to get a boost from 5,000 hotel rooms planned by 2020, Emperador continues to strengthen local and offshore businesses, while GADC is set to bring McDonald’s store count to 500 by 2016.
Incorporated in 1993 and listed on the stock exchange in 1999, AGI holds Tan’s businesses in property development (Megaworld); food and beverage manufacture and distribution (Emperador); quick-service restaurants via McDonald’s franchise; and integrated tourism development businesses.