Tanduay income jumps 72% to P573 million

MANILA, Philippines - Bucking the economic slowdown, Tanduay Holdings Inc. reported a 72 percent jump in consolidated net earnings last year to P573 million.

In a financial report filed at the Philippine Stock Exchange, Tanduay said net sales rose 13 percent to P10.2 billion even as sales volume increased only three percent.

The sales growth was attributed to an increase in selling prices by an average of 10 percent in 2009.

Cost of goods sold increased at a slower rate of 10 percent, enabling gross profit rate to improve from 16 percent to 18 percent. The increase in cost is primarily due to the eight percent increase in excise tax, higher cost of alcohol, packaging materials and manufacturing overhead.

Interest expense went up seven percent due to the short-term loans availed during the period. An impairment loss on property, plant and equipment amounting to P50.6 million was also recorded as a result of the temporary shutdown of unit Asian Alcohol Corp.’s operations.

There was also a drop in foreign exchange gain by 105 percent as the exchange rates did not significantly fluctuate in the current period compared to the previous year.

Total operating expenses grew 10 percent on account of higher selling expenses which increased 11 percent, and general and administrative expenses which expanded eight percent.

The increase in selling expenses was due to higher advertising and promotion expenses as a result of Tanduay’s ongoing activities in celebration of its 155th anniversary in 2009.

Tanduay is eyeing a full-year profit of between P300 million and P400 million on the back of a projected 5 percent rise in sales volume.  Its unit Tanduay Distillers Inc. (TDI), on the other hand, is looking at a net income of P500 million last year on revenues of P10 billion to P11 billion

TDI controls over 95 percent of the local rum market and is the second largest seller of rum in the world next to Bacardi of Puerto Rico.  It operates four liquor-bottling plants with a total capacity of about 120,800 cases per day and operates two distillation plants.

TDI is spending P100 million to put up a new bottling line in Cabuyao, Laguna which would have a capacity of 20,000 cases a day or 600,000 a year.  This move is in line with plans to move its Quiapo facility to Cabuyao as it converts the former to a marketing sales office.