La Tondeña Doubles Income in 1998

January 28, 1999 PSE CIRCULAR FOR BROKERS NO. 151-99 Press Release La Tondea Doubles Income in 1998 La Tondea Distillers, Inc. ended 1998 on a strong note, with a net income of P515 million double its 1997 level. Sales revenues reached P97 billion, an improvement of 11% from P8.8 billion the previous year. Operating income increased by 67% to P2.1 billion from P1.2 billion. Throughout the year, the Company posted satisfactory volumes across all its businesses with liquor growing by 5%, bottled water by 20% and juice by 12%. The introduction of new size and flavor variants, better sale coverage, and more focused advertising and promotions contributed significantly to this strong performance. Improved efficiencies were likewise achieved as a result of the full operation of the company's expanded distillery and new juice facilities. These, coupled with better molasses prices and reduced fixed costs, brought about the substantial increase in operating profits. Following successful initiatives to better manage inventories and receivables, working capital was reduced by over P1.5 billion. With its strong cash flows, the company was able to trim its interest-bearing debt by P1.6 billion. Another P1 billion of short-term debt was retired, using funds advanced by parent company San Miguel Corporation (SMC) for its participation in La Tondea's issue of convertible preferred shares Stockholders approved last July the issuance of P2 billion convertible preferred shares, half of which SMC has already paid for in advance. Having paid off P2.6 billion worth of debts, the company improved its debt-equity ratio to P1.29, compared to a high of P2.64 at the end of 1997. With its enhanced operating efficiencies and strong cash flows, La Tondea is well-positioned to take advantage of the anticipated economic recovery this year. aisadc