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A new
logo, rock concerts and new advertising jingles failed
to shore up revenues, sales and income of Tanduay
Holdings Inc.
At the
annual stockholders’ meeting Thursday, Tanduay chairman
and chief executive officer Lucio C. Tan gave out a
somber assessment of the company’s recent performance.
“Our
company is in a period of transformation,” said Tan, the
second richest person in the Philippines according to
Forbes magazine.
The
country’s leading rum maker posted a five-percent
decrease in revenue last year to P6.6 billion due to
what Tan said was a weak demand for liquor in 2006.
Higher
sales in Tanduay’s gin and vodka also failed to offset
lower sales volumes for rum and brandy, according to the
company’s annual report.
Inflationary pressures, depreciation of new capital
assets and costs related to syndicated long-term loans
added to a 15.65-percent drop in Tanduay’s net income
after tax from P735 million in 2005 to P620 million in
2006.
Tanduay’s earnings per share, hence, dropped to P0.19
last year from P0.23 in 2005.
The
discouraging figures came after Tanduay last year
toasted a strategy to capture the young drinkers
segment, especially for its Five Years brand.
In a
report to the Philippine Stock Exchange, Tanduay showed
its advertising and promotion spending went up by nearly
P14 million to P278 million from P264 million in 2005
and P237 million in 2004.
Of last
year’s revenues, 4.23 percent went to advertising and
promotion and 0.68 percent went to materials used and
changes in inventories.
Tanduay
said operating expenses increased 5 percent on account
of higher expenses for Five Years, Cossack Vodka and
Guerrero Brandy.
Other
expenses grew nearly 88 percent to P211.27 million, or
3.2 percent of revenue. The amount compares with other
expenses of P185.246 million in 2005.
Despite
spending substantial amounts for advertising and
promotions, Tan said the local liquor market remained
flat with brandy continuously taking away market share
from gin and rum, especially in
Luzon.
Tan said
that the company is facing the challenges of a maturing
customer base and a small share of the brandy market.
Chief
operating officer Wilson T. Young told reporters later
that the company remains optimistic with the launch of
new products this year and the scheduled opening of its
Cagayan de Oro plant by the third quarter of this year.
Formerly
known as Asian-Pacific Equity Corp., Tanduay has been
producing rum, wine, gin and brandy since 1937.
Its Five
Years brand a market leader with a 78-percent share of
total sales.
Tanduay
owns ethyl alcohol manufacturer Asian Alcohol Corp.,
distillery Absolut Chemicals Inc. and special purpose
firm Unimark Investments Corp. |
