AGI earnings weighed down by liquor, gaming units

Tycoon Andrew Tan’s holdings company Alliance Global Group Inc. reported an 10.6 percent decline in attributable net income to P4.2 billion in the first quarter of 2024 from the P4.7 billion earned in the same period last year.

In its presentation to stock analysts disclosed to the Philippine Stock Exchange, the firm earnings were weighed down by lower contributions from Travellers International Hotel Group Inc. and Emperador as “liquor sales were impacted by global and domestic macro headwinds."

It added that, “Higher input costs, marketing expenses and interest charges, as well as unrealized FX losses capped profitability.”

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Megaworld Corporation accounted for 64 percent or P3.2 billion of AGI’s profits, up 11 percent from P2.9 billion in the first quarter of 2023 while its minority share in Golden Arches Development Corporation which owns McDonald’s Philippines accounted for five percent or P0.3 billion, up 19 percent from P0.2 billion.

Emperador contributed 31 percent or P1.5 billion, down 20 percent from P1.9 billion in the previous year as Travellers’ contribution fell 96 percent to nil from P0.2 billion in the first quarter of 2023.

Revenues improved 0.6 percent to P50.6 billion from P50.3 billion in the comparable period of 2023, driven mainly by the surge in real estate sales coupled with strong revenues from McDonald’s and tourism-related spending.

Megaworld contributed 37 percent or P18.8 billion of revenues (up 16 percent from P16.2 billion), Emperador 26 percent or P13.1 billion (down 16 percent from P15.6 billion), Golden Arches 23 percent or P11.4 billion (13 percent higher from P10 billion), and Travellers with 14 percent or P7.1 billion (lower by 9 percent from P7.8 billion).

Travellers saw a decline in gross gaming revenues traced to a fall in VIP volume and hold rate, offsetting the continued improvement in mass gaming. Non-gaming revenues remained resilient as average hotel occupancy improved to 82 percent, together with steady MICE activities. Profitability was also affected by higher costs and marketing expenses.

For Emperador, brandy sales were weighed down by continued shift to value brands amid prevailing high domestic inflation while whisky sales were affected by changes in sales mix as global demand for spirits turned soft.

However, AGI said it maintains its optimistic outlook for the rest of the year, supported by its sound business strategies and superior product andservice offerings. It also looks forward to surmounting ongoing challenges and moves on to pursue the growth path it endeavors to achieve.

The firm has set a P75 billion capital expenditure program for 2024 of which P14.3 billion or 19 percent has already been spent in the first quarter of the year.

Of the P75 billion, Megaworld will get the lion’s share of P55 billion followed by Travellers with P10 billion, Emperador with P6 billion and Golden Arches with P4 billion.