San Miguel’s Q1 income up 19% as power units soar
The group's power unit, San Miguel Global Power, registered a whopping 46% increase in operating income,

MANILA, Philippines – Diversified conglomerate San Miguel Corp. announced a 19% increase in net income from its January to March operations, largely due to healthy growth in the profit streams of its power units.

San Miguel, which still controls but is less focused on the brewery business, recorded a net income of P8.5 billion during the period against P7.1 billion the previous year.

Its power unit, San Miguel Global Power, registered a whopping 46% increase in operating income, while San Miguel Brewery registered a 5% increase. These compensated for the 13% drop posted by the main operating units — food, drinks, packaging.

Consolidated net sales reached P142 billion, a 12% increase.  

These were how the operating profits of its units performed: 



  • Liquor – SAN MIGUEL BREWERY – operating income at P5.3 billion (up 5%) from consolidated revenues of P18.3 billion (up 5%). It suffered a 4% decline in sales volume but realized improved overseas volumes from Indonesia, Hong Kong, and Thailand and China which grew by 9%.
  • GINEBRA SAN MIGUEL – operating loss of P115 million vs profit of P85 million a year ago (down 236%). It realized a 24% decline in volume to 6 million cases.
  • Food – SAN MIGUEL PURE FOODS – operating income at P659 million (down 58%) from revenues of P22.4 billion (up 9%). It enjoyed higher demand and favorable selling prices across its businesses despite spikes in raw material prices in its commodity business. Volume of its poultry and meats business was up 8% with the opening of over 260 new Monterey Meat Shops and Magnolia Chicken Stations in 2011. Meanwhile, international operations also grew their revenues by 118%, boosted by the full integration of its Vietnam business acquisition.
  • Packaging – SAN MIGUEL PACKAGING – operating income at P511 million (up 11%) from revenues of P5.9 billion (up 3%), pushed by higher domestic sales and solid performance from its export business.
  • Power – SAN MIGUEL GLOBAL POWER – operating income at P4.96 billion (up 46%) from revenues of P19.36 billion (up 19%).
  • Oil – PETRON CORP – operating income of P4.62 billion (down 35%) from net sales of P74.66 billion (up 17%). It reported a 4% increase in sales volume, selling more than 12 million barrels in the first quarter and posting an 8% jump in domestic volumes growing which resulted in a 17% rise in revenues to P74.7 billion.

Business deals

Since the start of 2012, the portfolio of San Miguel has changed. In entered into or has announced the following deals:

  • It expanded its regional reach via its $577 million purchase of 65% of Esso Malaysia Berhad and 100% of ExxonMobil Malaysia Sdn Bhd and Exxon Mobil Borneo Sdn Bhd. The deal is coursed through Petron Oil and Gas International Sdn Bhd, Petron’s Malaysia subsidiary, which expects to invest up to $1.2 billion to upgrade and expand the oil refiner’s facilities
  • Entry into airlines business with the acquisition of 49% equity in holding companies of legacy carrier Philippine Airlines and AirPhil Express through San Miguel Equity Investments Inc. (SMEII)
  • It sold 58% of its stake in Bank of Commerce for P12 billion through a share purchase agreement with CIMB Bank Berhad of Malaysia

Capital expenditures

San Miguel Purefoods Company, Inc. (SMPFC), the conglomerate’s food unit has budgeted P6 billion for the capital expenditure largely for its new grains terminal and nuggets line expansion.

The company had broken ground for a new grains terminal it plans to put up in Mabini, Batangas and is currently in the preparatory stages of construction.

“We expect it to be operational by the third quarter of 2013. This terminal is designed to accommodate larger vessels which would reduce our freight costs,” SMPFC Chairman Eduardo M. Cojuangco Jr. said.

Meanwhile, a second nuggets line is being constructed to expand operations in its General Trias, Cavite plant due to increased market demand for nuggets and related products. The construction of the new line is already halfway done and it is expected to be operational by third quarter of 2012, he said.

The company also noted that it benefitted from synergies with Petron Corp. as its distribution network was augmented with the acquisition of Treats convenience stores. It also launched several new products under its value-added meats and dairy segments.

“We expect the rest of 2012 to be filled with challenges. Yet we remain confident and excited as we hurdle these. We will not lose sight of the big opportunities available to our company,” Cojuangco said. –