SMC profit drops 89% to P6.28 billion in first half

MANILA, Philippines - San Miguel Corp., Southeast Asia’s largest food and beverage conglomerate, posted net earnings of P6.28 billion in the first half of the year, down 89 percent from the P55.6 billion recorded in the same period in 2009.

In a statement, the diversifying conglomerate explained that the 2009 figure included a P50.7-billion gain from the sale of its 43.25-percent stake in its local flagship brewery firm to Japanese brewer Kirin Holdings Co. The money was used to prepay P44 billion worth of debt.

In addition, San Miguel recorded a P5.7-billion gain from the discontinued operations of Australian brewer J. Boag last year.

Excluding these non-recurring items, along with foreign exchange gains, San Miguel said its net earnings rose seven percent during the period.

Consolidated sales reached P91.9 billion, up eight percent from P84.9 billion on brisk sales of beer and liquor, pushing operating income 40 percent higher at P12.1 billion.

Equity in earnings of affiliates amounted to P1.09 billion, 22 percent higher than the year-earlier level, owing to the contribution of Manila Electric Co. (Meralco) to San Miguel’s earnings.

San Miguel Brewery Inc. benefited from election and summer-related consumer spending with its net earnings rising 14 percent to P5.56 billion. Revenues likewise went up 11 percent to P27.7 billion on intensified distribution and marketing activities.

Meanwhile, revenue from the international beer operations was flat at $128.1 million.

Liquor unit Ginebra San Miguel likewise reported a 26-percent jump in first half net earnings to P538 million on the back of a nine-percent hike in sales volume, led by flagship Ginebra San Miguel Gin and GSM Blue. Sales revenues amounted to P11.2 billion or 20 percent higher than the previous year.

Higher revenues, combined with stable fuel and molasses costs, yielded a 40-percent gain in consolidated operating income to P862 million.

The Food Group’s revenues were likewise flat at P38 billion, from P37.5 billion, due to the steady performance of its poultry, feeds, dairy, coffee and most of the group’s regional businesses. Operating income more than doubled to P2.77 billion.

Revenues from San Miguel Yamamura Packaging Group climbed 13 percent to P11.5 billion owing to higher glass volumes, strong performance from Malaysia, new contracts in Australia and growing export volumes.

The group’s emerging power business — comprising Sual, Limay and San Roque power plants — registered combined revenues of P24.1 billion, chipping in P699 million to San Miguel’s consolidated net income.

After dominating the local food and drinks sector for decades, the 120-year-old conglomerate has been selling substantial stakes in its core businesses to fund its diversification into power, infrastructure, telecommunications and water utility to spur faster growth.