MANILA, Philippines - Lucio Tan's LT Group reported its attributable net income plunged 32% to P8.6 billion in 2013, due to lower profits from its tobacco business.
In 2012, LT Group posted a net income of P12.75 billion.
In a statement, the LT Group said its tobacco business contributed P3.9 billion of the total, followed by Philippine National Bank with P3.43 billion. Asia Brewery contributed P1.042 billion, while Tanduay Distillers added P185 milion.
LT Group said the income from tobacco business, which includes PMFTC and Fortune Tobacco Corp., fell 43% to P3.93 billion, from P6.9 billion in 2012. PMFTC's sales volume fell 26% to 68.5 billion in 2013, resulting in a drop in average market share to 79% from 90%.
The tobacco business was affected by the implementation of the excise tax reform law in 2013. Excise tax in the upper tier doubled to P25 per pack from P12, while the excise tax in the lower tier surged to P12 per pack from P2.71.
"This was exacerbated by the illicit trade from a competitor who kept the price of low-end cigarettes at an economically unsustainable level of P1 per stick or a truck price of P14.70 per pack. The P12 excise tax plus P1.58 VAT leaves only P1.12/pack to cover the cost of production and distribution, which is unrealistic, when paying full taxes," the company said, referring to rival tobacco firm Mighty Corp.
LTG noted that many consumers opted to buy "super-low" priced cigarettes, which caused the industry share of super-low priced cigarettes to jump to 41% in the fourth quarter from only 15% in 2012.
Meanwhile, PNB's unaudited 2013 income fell 4% to P6.2 billion, due to the P875 million loss in the fourth quarter from the impact of "Yolanda" to its general insurance business.
Asia Brewery's income jumped 32% to P1.043 billion in 2013, from P787 million in the previous year. The profit includes a P291 million gain from the sale of a one-hectare lot in Pasong Tamo, Makati to Eton Properties. Without the property sale, Asia Brewery's core income fell 4% to P752 million. Revenues were flat at P13.4 billion, due to a price war among cola brands and the higher excise taxes for beer.
Tanduay Distillers, on the other hand, reported the net income declined 82% to P185 million in 2013. This included a one-time expense of P105 million from the closure of its old plant in Quiapo, Manila. Excluding this, core income fell 72% to P290 million.
Property unit Eton's net income surged 123% to P105 million, as it reported 36% jump in revenues to P3.65 billion.