LT Group Inc., the holding firm of most businesses of tycoon Lucio Tan, said it is “guarded” in its outlook for the rest of 2020, even as it expressed confidence that its strong performance last year will allow the company to weather challenges.
“Even as the economy is restarted under different permutations of the quarantine thereafter, it will take a while before our economy goes back to normal, or to what it used to be,” Michael G. Tan, company president, said during the firm’s annual stockholders’ meeting, which the company conducted online.
Tan said the pandemic would hit the public’s purchasing power and will affect demand for consumer goods, where most of the company’s businesses are.
“[It] will affect the sales volumes of the products of PMFTC Inc., Tanduay and Asia Brewery. Eton [Properties Philippines Inc.] will also be affected as some tenants may end their lease contracts. PNB [Philippine National Bank] will have to grapple with nonperforming loans and slower demand for loans.”
PMFTC Inc. is the combined tobacco business of Philip Morris Philippines and Tan’s Fortune Tobacco, while Tanduay Distillers Inc. is the liquor maker. Asia Brewery Inc. is LT Group’s beverage company.
He said the effects of the pandemic were already felt starting mid-March, when the government declared an enhanced community quarantine (ECQ), particularly by the bank, tobacco and the alcoholic and nonalcoholic beverage businesses.
“Some plants were not allowed to operate when ECQ was declared as the products were considered non-essential. Sari-sari stores that play a big role in reaching consumers, were closed in some areas. There were also liquor bans declared by some local government units.”
Tan noted government estimates that the economy will contract by 2 percent this year. However, some economists expect a much steeper fall.
In 2019, LT Group’s attributable net income reached P23.12 billion, or 43 percent higher than the P16.19 billion reported for 2018. This was the highest income that the company achieved since its re-IPO (initial public offering) in April 2013.
In the first quarter, its attributable net income amounted to P6.21 billion, 41 percent more than the P4.42 billion it reported last year.