LT Group earmarks P9.7B capex for 2021

Tycoon Lucio Tan’s conglomerate LT Group Inc. is setting aside almost P10 billion for its capital expenditure plan this year as it banks on a better business environment despite the pandemic.

During the company’s annual stockholders meeting on Wednesday, LTG president and chief operating officer Michael Tan announced that the firm’s capex for this year is at P9.7 billion, a 94% increase from its P5-billion capital spending program in 2020.

Tan said the capex increase is mainly from Philippine National Bank’s (PNB) digitalization initiatives, specifically at P4.6 billion.

The company is earmarking P2-billion for its real estate arm Eton Properties to ramp up construction works since this was halted during the strict lockdowns in 2020.

LTG, likewise, set aside P1.5 billion in capex for Tanduay Distillers and P1 billion for the ALI Eton Property Development Corp., a 50-50 joint venture between Eton Properties and Ayala Land.

Its Asia Brewery Inc., meanwhile, was allocated with P700 million in the group’s 2021 capex program.

“The ECQ (enhanced community quarantine) in Metro Manila starting late March which has since been downgraded to a modified ECQ will impact the government’s projected GDP growth of between 6.5% to 7.5% for 2021, that was announced earlier this year.  But this is still a reversal from the 9.5% contraction of 2020,” Tan said.

“The country got off to a slow start in 2021, but with the vaccination program of the government underway and the private sector starting soon, hopefully, the economy can open up more as more people get inoculated, and businesses can operate at efficient levels and thereby provide more jobs,” he added.

To recall, LTG has secured vaccines for its over 50,000 employees and service providers as well as to their families.

“The slow opening-up of the economy in 2021 should bode well for all businesses in general. LTG expects the demand for consumer goods, those of Tanduay Distillers Inc. and Asia Brewery Inc. (ABI), to show some volume growth or at least remain steady,” Tan said.

“But the volume of PMFTC Inc.’s products might still be impacted, as price increases are needed to pass on the annual increase in excise taxes, the last of which was in October 2020,” he said.

Cigarette manufacturer PMFTC is owned 50% by LTG and 50% by Philip Morris International.

“Philippine National Bank will see some more NPLs (non-performing loans) booked as Bayanihan 1 and 2 that provided a grace period for borrowers ended in 2020, but a better economy should pave the way for the need of more loans,” Tan said.

“Eton Properties Philippines Inc. (Eton), with most of its leasing portfolio in office space will not be as affected as other developers who are more reliant on retail space,” he added.—AOL, GMA News