LT group of banks on tobacco products, alcoholic beverages, to stimulate growth

Conglomerate LT Group Inc. is betting on market leadership in its core business of tobacco and alcoholic beverages for further growth, its top executive said yesterday.

images“We will focus on our core business and fully capitalize on our market leading position to benefit from strong demand in the growth of consumer-oriented business,” LT Group president Michael G. Tan told reporters.
Non-core businesses, such as the Philippines Airlines (PAL) will end up on the sale block, as the company specializes in the consumer sector, he said.
LT group also take advantage of synergies in their operating units through cross-selling while improving the distribution network, Tan said
LT Group of tycoon Lucio Tan is into beer (Asia Brewery Inc.), Distillery (Tanduay Distillers Inc.), real estate (Eton Properties Philippines Inc.), Banks (Philippine National Bank) and tobacco (PMFTC Inc.)

Tan said the group is heavily exposed to the consumer sector, which accounts for two-thirds of the local economy.
“We are where we want to be, as we strive for strong growth and higher profitability,” Tan said.
In April, LT Group raised P37.72 billion in the largest subsequent sale of the shares of a Philippine company that will conglomerate to support the organic growth of its property, beer and banking unit if you pay existing debts.
In particular, LT group plans to recapitalize the PNB, formally merged with Allied Bank last February last year to create the country’s fourth largest bank.

“The original plan is for PNB to offer new shares. LT Group will subscribe so it will not be diluted,” Tan said.
Tang said that there are no constant discussions for a potential merger with the Ayala-led Bank of the Philippine Islands.
For the real estate segment, Eton Properties lined up several business process outsourcing (BPO) buildings to increase its recurring income, said Tan.
Asia Brewery also focus on increasing sales of its newly introduced products yogurt and soy milk.
“Once we get the critical volume, we will produce here,” Tan said, adding that the plant in Cabuyao, Laguna can accommodate the plant, which can be export hub of Southeast Asia.

For liquor and beer, Tanduay, the second largest producer of rum in the world, will begin to export rum to the USA. Beer business will focus on the premium segment, as excise tax structure contributes to a more expensive beer, said Tan.
Given the focus on the consumer segment, non-core business is likely to be on sale.

Tan said the family is in talks with foreign investors for the sale of its 51 percent stake in PAL flag carrier.
“The airline is one of the strategic sectors we want to be in it, why is it not in the group LT”, said Tan.
“Companies outside [LT Group] is not considered strategic. We are looking at opportunities to grow it or sell it,” Tan said.

Other non-core businesses are aviation-related services firm MacroAsia Corp. and Victorias Milling Co. Inc.
LT Group increased its profits by a third to P3.8 billion in the first quarter. Revenues took 14 percent to P17.7 billion “due to higher income from banking, liquor and property development, which offset the drop in revenue in the beverage and tobacco sectors.”

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