La Tondeña Posts Strong 3rd Quarter

October 21, 1998 PSE CIRCULAR FOR BROKERS NO. 2417-98 PRESS RELEASE La Tondea Posts Strong 3rd Quarter La Tondea Distillers, Inc. performed strongly in the third quarter of 1998, with consolidated net sales increasing by 24% to P2.4 billion from P1.9 billion in the same period last year and net income growing more than six times from P24 million to P157 million. The company attributed the higher profits to focused marketing and selling initiatives, more effective cost control, and tighter management of funds. All of the company's businesses posted significant increases in sales volume, with liquor growing by 21%, juice by 27%, and bottled water by 5%. The strong volumes coupled with lower molasses prices and fixed costs improved margins considerably, boosting operating income for the third quarter to P554 million, up 105% from P270 million. For the year to date, LTDI's sales revenues totalled P7 billion, up 14% from P6.2 billion for the first nine months of 1997, while operating income increased by 46% to P1.47 billion from P1 billion. Net income totalled P310 million, up 2% from P304 million a year ago and exceeding net income for the whole of 1997 by 29%. Given its strong cash flows, the company trimmed its debts by over P850 million to P5.8 billion by the end of the 3rd Quarter. Interest expenses continued to be high, however, reaching P1 billion and eating up 68% of operating income. New liquor product variants introduced in the Southern Philippines contributed to the volume surge, even as the company also increased its hold in the North. Consequently, the Company's total liquor market share improved to 54% as of August, from 51% in May. LexLib With the completion of its Bago distillery expansion in Negros Occidental, LTDI expects to generate 10-15% savings in alcohol costs starting the 4th quarter. At full capacity, the plant will supply up to 90% of the company's alcohol requirements. The company's PET bottled water segment continued its robust growth, outpacing the five-gallon line, which started to slow down as a result of intense pricing wars among refilling stations. As of July, the company's bottled water market share held at 21%, sustaining the company's No. 1 position in the industry. The company's juice products also registered strong returns, even as the juice industry continued to contract. Its market share in the ready-to-drink segment remained 23% as of July, making LTDI the second largest player in the juice industry. Given its good performance and prospects, the Company is confident that it will outperform 1997 in all its businesses.