Tan grandson named new vice chairman, COO
MANILA, Philippines — LT Group Inc. (LTG), the listed holding company of taipan Lucio Tan, is allocating a higher capital spending budget for 2022 given the company’s improved prospects for the year.
LTG is earmarking P12 billion for capex this year, higher than the P9 billion it allotted last year.
The increase is due to higher IT budget for Philippine National Bank (PNB), as well as the expected pick-up in the construction of projects of Eton Properties Philippines Inc. and ALI Eton Property development Corp.
“Prospects for the coming quarters are strong as we see business slowly returning to pre-pandemic levels. Overall, we expect business to improve in the short-to-medium term, driven by the economic reopening and resurgence of business activities after two years of slowdown,” LTG chairman Lucio Tan said in the company’s 2021 annual report.
During the company’s annual stockholders’ meeting yesterday, LTG president and chief operating officer Michael Tan said 2022 should be a better year than 2021 as the economy opens up and as more and more people get vaccinated.
“The opening up of the economy means that the purchasing power of consumers will improve and bodes well for our different businesses,” he said.
For its tobacco business, Michael said PMFTC’s price increase in late March may translate to higher profits as long as volumes hold or increase.
He said demand for Tanduay Distillers Inc.’s liquor should also be better, although rising alcohol costs may not enable the company to improve margins despite the price increases implemented in the first quarter.
For Eton, Michael said the company should hopefully see higher occupancy rates, but it would take a while for new tenants to complete fit-outs.
He said the full impact of a return for demand for office and retail spaces would be seen in 2023.
With people going back to the office, demand for Asia Brewery Inc.’s on-the-go products is also expected to recover, especially for the smaller sizes of bottled water and soymilk.
For PNB, Michael said an improving overall economy should mean less nonperforming loans and higher net interest margins for the bank’s core business.
He said the upcoming elections and the expected smooth transition of power by June 30 should be a cause for further optimism moving forward.
“We continue to face many challenges. The economy has yet to return to pre-pandemic levels. Illicit trade of tobacco products remain a major threat and rising inflation due to high fuel cost and disruption in the global supply chain are adding to our cost of production,” LTG vice chairman Carmen Tan said.
“In the face of these challenges, we must continue to innovate the cost of production and invest in the new technology and human capital,” she said.
Meanwhile, Lucio Tan’s grandson Lucio Tan III, a current director, has been named as LTG’s new vice chairman and COO at the organizational meeting of the board of directors held after the company’s annual stockholders’ meeting yesterday.
LTG said Lucio III will also take over the position as president and COO of the conglomerate no later than April 2023.
Michael Tan will continue to serve in his capacity as president during a transition period, while sharing the decision-making for business and operational matters.
“I am very grateful for the trust and confidence of the chairman and the board of directors. I am fortunate to be working with the best minds in business, who have helped create a leadership succession plan that will ensure stability and business continuity for the LT Group,” said Lucio III.
Lucio III, the first son of the late Lucio “Bong” Tan Jr., has assumed various leadership roles within the conglomerate since he settled in the Philippines in 2019.
“It is my honor to be entrusted with this responsibility. I intend to uphold the values that are strongly held by my grandfather, Lucio C. Tan and which I likewise hold dear — the values of integrity, hard work, and diligence,” he said.
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The article was originally published in PhilStar Global and written by Richmond Mercurio.
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