San Miguel Corp Q1 profits drop 51%

MANILA, Philippines – San Miguel Corp., the country’s biggest business group, saw its net income dropped 51% to P4.2 billion for the first quarter 2013.

The company cited the higher sin tax rates, the low oil prices, higher interest expences and the lack of one-off foreign exchange gains for the plunge from the P8.5 billion in the same period a year earlier.

“External factors such as the revised excise tax law and volatility in crude prices also weighed down San Miguel Brewery, Ginebra San Miguel, and Petron Corp., respectively. Earnings from affiliates also declined due to higher maintenance costs and other operating expenses incurred by Philippine Airlines and PAL Express,” said SMC in a statement released to the Philippine Stock Exchange (PSE).

Consolidated revenues was up 25% to P178.3 billion in the first 3 months of the year, mainly driven by power arm SMC Global Power and the improved performance of other businesses, particularly the food business.

“While we have had mixed results on a per business basis owing to various challenges in the different industries, overall, the company is off to a good start,” said SMC president and COO Ramon S. Ang.

In a previous interview, San Miguel had said that it expects its revenues to reach $50 billion by 2018 as it acquires new businesses and expands existing ones. This is nearly 3 times what San Miguel made in 2011, when it ended the year with $17.5 billion in revenues.

“In the next 5 years, we are expecting our revenue growth to reach $50 billion through new acquisitions and expansion of existing business,” San Miguel and Philippine Airlines (PAL) president Ramon Ang said on the sidelines of the PAL Holdings Inc’s special stockholders meeting on Friday, March 15.

Selling off units

On May 9, San Miguel announced that it was open to selling its 36% stake in Manila Electric Co., SMC’s energy arm at current market prices. Ang told reporter that he was “not looking” for buyers, but if he were to receive a good offer, he said he would consider selling the stake. 

On May 10, Ang  said they are also interested in selling shares in Pure Foods but willing to keep up to 51%.

“In PureFoods we are willing to sell and keep up to 51% for food, power generation and anything else. So far 15% of PureFoods has been sold. To sell more is not a problem. A lot of investors are interested in that company,” said Ang.

About “$5 billion is the stake we are eyeing,” he added.

PAL and PAL Express, where the company has a significant minority, is also looking to trim its losses once its new routes are opened and its new aircraft are put into service.

This is how the different subsidiaries fared:

 

• Beer and Liquor

San Miguel Brewery Inc.’s posted first quarter consolidated revenues of P17.5 billion, 4% lower from 2012 levels, with volume sales reaching almost 48 million cases. Acording to SMC, new excise tax rates implemented at the beginning of the year affected volumes as operating income declined by 9% to P4.8 billion.

The increase in excise taxes also affected Ginebra San Miguel’s performance dampening revenues by 15% to P3.1 billion. However, the company reported a 2% increase in market share due to positive consumer response to marketing programs.

• Food

San Miguel Pure Foods Company Inc. was off to a solid start as consolidated revenues for the first three months reached P23.0 billion, 3% higher than 2012 on the improved performance of its agro-industrial cluster and sustained performance of other businesses.

Consolidated operating income rose 43% to 916 million, while net income surged 25% to P699 million.

• Packaging

San Miguel Yamamura Packaging Corporation posted consolidated operating income of P520 million, up 2% from the same period in 2012.
Despite higher sales in metal, plastics, and PET, year-to-date sales revenue declined 6% to P5.5 billion on lower orders for its glass and paper products.

• Power

SMC Global Power posted consolidated revenues of P17.5 billion, lower than 2012 due to lower average selling prices for bilateral contracts and at the Wholesale Electricity Spot Market.

Higher WESM volumes from Sual and Ilijan however boosted consolidated off-take volume for the first quarter of 2013 to 4,091 gigawatt hours, 1% higher than last year.Operating income reached P5.54 billion, 12% higher than year-ago levels.

• Fuel and Oil

Petron Corporation’s first quarter revenues rose 50% to P112 billion from P74.7 billion in 2012, boosted by the consolidation of Petron Malaysia affected by low oil prices.
Total sales volumes from domestic and Malaysian operations rose to 20 million barrels, up 66% from 12 million barrels in the previous year.

• Other Businesses

The company also said that it has already received the Department of Transportation and Communication (DOTC)’s notice of award for its newest project, the Ninoy Aquino International Airport Expressway.

Other infrastructure projects, such as the Boracay Airport expansion and the Tarlac-Pangasinan-La Union Expressway, are also in advanced stages of development. – Rappler.com