PMFTC to merge with subsidiary

PMFTC Inc. on Monday said it is merging with one of its shareholders, Philip Morris Manufacturing Philippines Inc., as part of the restructuring of its operations in the country.

PMFTC—THE combined cigarette manufacturing firm of Lucio Tan’s Fortune Tobacco Corp. and Philip Morris—will be the surviving entity, the company LT Group Inc. (LTG) said in its disclosure to the Philippine Stock Exchange.

The said merger will take effect on June 1 this year subject to approval from the Securities and Exchange Commission.

“As a result of the merger, PMFTC’S Articles of Incorporation will be amended in accordance with the Articles of Merger and Plan of Merger. The merger is part of an internal restructuring process and is not expected to materially affect the operations, earnings and ownership of PMFTC,” the company said.

The LT Group holds 49.6 percent of the combined firm, while Philip Morris owns the rest.

LTG earlier said the volume of

PMFTC’S sales fell 14 percent for the three quarters of 2020 compared to 2019.

The industry’s volume is estimated to have declined by 11 percent for the 9-month period due to the August 2019 price increase, coupled with the impact of the enhanced community quarantine implemented in Luzon starting March 17 and in other select cities thereafter up to end-may 2020.

LTG’S income from its tobacco business, however, rose 27 percent to P12.17 billion from the previous year, despite the industry-wide volume decline.

“The higher income is attributed to the higher share of premium Marlboro with customers shifting from mid-priced Fortune, as well as the price increases implemented in late August 2019 to pass on higher excise taxes,” the company said.

Illicit activities have also been on the rise, the company claimed, as there were a total of 150 machines were seized from illegal factories, 70 more than the 80 machines seized last year. The 150 machines can form 24 lines, with each line estimated to produce as much as 3 million sticks per day.