Weak peso hits San Miguel’s H1 2015 profit

MANILA, Philippines – Philippine conglomerate San Miguel Corporation (SMC), known best for its beer brewing business, on Wednesday, August 12 said its first-half profit fell 8% as a weak peso inflated debt costs.

Interim net income dropped to P16.9 billion ($365.52 million) between January and June, from P18.4 billion ($398.01 million) during the same period in 2014, the company said in a stock exchange filing.

The 125-year-old conglomerate – which also has investments in petroleum, infrastructure, and food – said it took a P1.1 billion ($23.80 million) hit from currency movements compared to the same period last year.

Not counting foreign exchange losses, net profit for the period rose 15% to P18 billion ($389.53 million), it said.

Investors were upbeat on the results, pushing SMC shares up 0.18% in morning trading in Manila, compared to a more than 1% fall in the broader benchmark index.

“The outlook for SMC remains positive,” Angping and Associates Securities research head Juan Rafael Supangco told Agence France-Presse.

“There is volatility (in the exchange rate) but if you look at core operating income, it actually grew.”

SMC and its units have P374 billion ($8.09 million) in debt excluding interest, more than 70% of which is in dollars, according to Bloomberg data.

That has become more expensive to service as the greenback has strengthened on hopes for an imminent US interest rate rise, while the peso has weakened as investors have fretted about a fall in exports from the Philippines.

SMC said net profits in its brewery business rose 10% to P6.9 billion ($149.27 million) while its food business posted a 5% increase to P1.8 billion ($38.94 million).

Net income at its oil refinery business, Petron, also rose 13% to P3.4 billion ($73.55 million), despite weak oil prices, and Supangco said an increase in sales would further boost income this year. – Rappler.com

$1 = P46.22