By James A. Loyola
LT Group, Inc. (LTG), the flagship of taipan Lucio Tan, is increasing its capital expenditure budget to P10 billion this year from P7 billion in 2016 as it expects the business environment in 2017 to be better than the previous year.
In an interview after the firm’s annual stockholders’ meeting, LTG President Michael G. Tan said P5 billion will be earmarked for the construction costs of Eton Properties Philippines, Inc., P2 billion to P3 billion for technology upgrades of Philippine National Bank, and the balance for working capital of its other subsidiaries.
Tan said prospects for the group’s different businesses remain positive as the government’s infrastructure plan will increase employment, especially in the countryside, which in turn will increase the purchasing power, resulting in continued demand for the group’s products.
However, he said a lingering concern is the stiff competition, and rising inflation which will translate to higher costs.
Tan said PNB will be able to take advantage of the sustained demand for loans and its migration to a unified, more modern IT system within 2017 should enable it to offer customers more products and services. But, the bank will have to work harder to compensate for the one-time gains booked in 2016.
Asia Brewery will benefit from the increasing income of consumers, despite stiff competition. Consumers’ higher disposable income will sustain demand, as well as provide a new market for Vitamilk soymilk which was previously being sold only in the modern trade.
Meanwhile, the joint venture with Heineken will enable the Company to develop a bigger market for beer and alcopop. However, additional marketing expenses will have to be incurred to develop and expand existing and additional brands, especially in the alcoholic beverage segment.
Tanduay will likewise benefit from the renewed demand for rhum, especially in Mindanao and Visayas. A more inclusive growth in the Philippines will mean that consumers will have more discretionary funds to buy our products.
Eton will continue to enjoy high occupancy rates in the BPO office buildings, as well as the retail space that complement these and its residential developments.
LTG is hopeful that PMFTC’s profitability will improve as the Government addresses the illicit trade and the industry moves into a level playing field.
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