LTG profit climbs 3% as bank offsets weaker units

LT Group, Inc. (LTG), the holding company behind tycoon Lucio C. Tan’s business interests, grew attributable net income by 3 percent to P7.49 billion in the first quarter, as stronger earnings from its banking unit helped cushion softer contributions from some of its consumer businesses.

The company reported on Tuesday that Philippine National Bank (PNB) remained the conglomerate’s biggest earnings driver, contributing P3.58 billion or 48 percent of total profits during the January-to-March period. 

Tobacco unit Fortune Tobacco Corp. (FTC) accounted for P2.85 billion or 38 percent, while Tanduay Distillers Inc. added P572 million and Eton Properties Philippines Inc. chipped in P154 million.

The banking business posted a 5 percent increase in net income to P6.37 billion, lifted by higher loan volumes and lower funding costs.

Gross interest income inched up 1 percent year on year to P17.29 billion, while gross interest expense dropped 14 percent to P3.83 billion due mainly to lower interest costs on bonds payable. This pushed net interest income 6 percent higher to P13.46 billion.

Fee-based income also improved, with net service fees and commissions rising 6 percent to P1.51 billion on stronger bancassurance, deposit, and loan-related transactions.

But market volatility weighed on treasury operations, as trading and investment securities and foreign exchange activities swung to a net loss of P230 million from a net gain of P862 million a year earlier.

Other income nearly doubled to P1.94 billion from P1.07 billion, boosted by higher gains from sales of real and other properties acquired.

FTC, meanwhile, posted a modest 2 percent increase in net income to P2.86 billion as higher dividend income from PMFTC helped offset weaker equitized earnings tied to lower cigarette sales volumes.

Industry cigarette volume rose 5 percent year on year to 11.8 billion sticks in the first quarter, although PMFTC’s shipment volume slipped 4 percent to 5.4 billion sticks from 5.6 billion previously.

PMFTC raised cigarette prices in March following another excise tax increase under Republic Act 11346, which lifted the tax to P69.46 per 20-stick pack effective this year.

Tanduay delivered one of the strongest performances among LTG’s consumer units, with net income climbing 9 percent to P575 million as higher selling prices offset weaker liquor volumes. Revenues rose 3 percent to P7.37 billion.

Property arm Eton saw net income edge higher to P155 million from P144 million, supported by stronger leasing margins driven by higher rental revenues and lower operating costs.

In contrast, Asia Brewery Inc. saw net income tumble to P98 million from P178 million as weaker beverage and packaging revenues combined with rising production costs for glass bottles squeezed margins.

As of the end of March, LTG’s debt-to-equity ratio stood at 3.00:1 with the bank and 0.09:1 without the bank, while the parent company held P2.08 billion in cash.