Tanduay reports P262-million net income for first half

MANILA, Philippines - Tanduay Holdings Inc. reported a net income of P262 million in the first half this year, down eight percent from the same period a year before on higher operating expenses.

In a financial report submitted to securities regulators, Tanduay said net sales rose 15.1 percent to P5.63 billion while gross profit grew 40.49 percent to P1.33 billion.

Net sales, however, were dampened by the sharp increase in general and administrative expenses, which balooned to P481.8 million from only P152.03 million due to higher bank charges as a result of the pre-termination of Tanduay’s syndicated loan, issuance of the P5 billion retail bonds and higher management fees.

Selling expenses likewise increased by 16 percent as a result of the massive advertising campaigns of new products and promotional tours highlighted by “Tanduay’s First Five” participated by the country’s top five most popular bands.

Cost of goods sold went up nine percent as the cost of alcohol and brand new bottles went up during the period.

As of end-June this year, Tanduay’s consolidated assets amounted to P13.2 billion, 12 percent higher than the P11.8 billion recorded in December 2009.

On Feb. 15, 2010, using the proceeds of the bonds, Tanduay preterminated and fully paid the outstanding balance of the syndicated loan of P4.2 billion with an effective interest rate of 9.68 percent.

Tanduay is eyeing a net income of between P300 million and P400 million this year on the back of a projected five percent rise in sales volume this year.

Last year, Tanduay reported a more than three-fold increase in its net earnings mainly due to higher sales and effective cost-saving strategies. From a meager P100.6 million in 2007, Tanduay’s net income rose to P338.2 million.

Its unit, Tanduay Distillers Inc. 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.