SMC projects profit growth this year

MANILA, Philippines – Diversified conglomerate San Miguel Corp. (SMC) expects business to be rosy in the next few years with an incoming president from Mindanao and an upgraded Bataan refinery spewing out billions of pesos.

With solid first quarter results, SMC’s profitability is seen soaring to greater heights in the coming quarters, its president and chief operating officer Ramon Ang said.

“All of our businesses are improving. Food is doing very well as well as the beer. Ginebra will turn around and start making good runs. Packaging is doing well also as well as tollways. The airport in Caticlan will start jet operation this second quarter and the power business will also be strong this quarter because of the summer season. By large, our second quarter is going to be much, much better,” Ang said.

SMC’s net income in the first three months of the year more than doubled to P13.5 billion on robust growth of its core businesses.

“But so far, the biggest profit contributor is the turnaround of Petron. If you notice, Petron is just starting to pick up, so it will deliver much better than that. The good news is the Petron refinery is now able to achieve the target of 93 percent liquid yield when in the past it is just 66 percent,” Ang said.

“With 93 percent liquid yield for Petron and at oil prices of $40 on the average, that should give is $600 million to $700 million of operating income for the whole year,” he added.

Petron several years ago embarked on a $2-billion Refinery Master Plan Phase 2 project which would allow the company’s 180,000 barrels-per-day Bataan refinery to run at full capacity and also transform it into one of the most advanced facilities in the region in terms of processing and energy efficiency, operational availability, and complexity.

Starting next year, Ang said Petron could easily post a net income of about P20 billion annually with the Bataan refinery expected to achieve its full capacity and efficiency this year.

“First quarter of San Miguel has started to gain traction, already looking very good. But this is just a start,” Ang said.

According to Ang, SMC’s business is expected to further flourish with the incoming regime of Davao City Mayor Rodrigo Duterte.

“We have a lot of investments in Mindanao. With a president from Mindanao, we have hit the jackpot because many of our businesses can now pursue investments there because the president from Mindanao for sure can solve the peace and order problem of Mindanao,” he said.

“These projects were already planned years ahead without even knowing that we will have an incoming president from Davao. So those projects will be built to help develop Mindanao, to create jobs. We have been wanting to develop Mindanao because we believe foreigners are afraid to go there. But we Filipinos should be the first to go there to invest. Once we do that, foreigners will follow and once they do, the life of our brothers there would improve,” Ang added.

Among the projects SMC intends to grow in Mindanao are in the power, mining, and industrial estate sectors.

For its industrial estate venture in Mindanao, Ang said locators are already lining up to invest in its Philippine Economic Zone Authority-approved properties.

“I think I can bring in a toy manufacturing company there that can employ 80,000 people. I will be bringing in also soon a shipbuilding company,” he said.