San Miguel to invest P6 billion in 2 projects

MANILA, Philippines — San Miguel Corp., the country’s diversified conglomerate, is pouring roughly P6 billion into two new projects including a new manufacturing facility for “ready-to-eat” products, which are part of the company’s ambitious expansion projects for its food business.

Of the P6 billion, the company is investing P3.7 billion for the expansion of its flour milling facility in Mabini, Batangas, which is expected to start commercial operations in the first quarter of next year, according to company data obtained by The STAR.

The expansion of the flour milling building is already 87 percent complete and the company has already poured in P2.8 billion for the project as of the first half.

This is funded through internally generated cash from operations and short-term loans.

The remaining P2 billion would be used for a new facility for “ready-to-eat” products in Laguna, among the firsts of its planned new food facilities.

The phase one of the “ready-to-eat” plant is targeted to commence commercial operations in March 2019 while the second phase is targeted for completion in 2024.

The plant, which is at least 20 percent complete, would be manufacturing “ready-to-eat” meat products.

Of the P2 billion for the new plant, SMC has already poured in roughly P450 million, funded from internally generated cash from operations.

The two new projects are part of the SMC’s ongoing capacity expansion touted as the largest expansion in history.

During the company’s annual stockholders’ meeting in June, officials announced a P742 billion investment from 2017 to 2019 to fund the capacity expansion.

The company is also building breweries in various areas including La Union, Laguna, Quezon, Bicol and Misamis Oriental to reduce logistics costs.

SMC can spend as much as $1.5 billion for up to six breweries, with the cost of each brewery at $250 million.

The beer business is SMC’s first business. The company started as La Fabrica de Cerveza de San Miguel, which was Southeast Asia’s first brewery, producing and bottling what would eventually become one of the best selling beers in the region and among the world’s top beers.

San Miguel has since diversified into other beverages, food, packaging, fuel and oil and in recent years, power and infrastructure.  It is one of the country’s largest conglomerates, generating roughly 10 percent of the country’s gross domestic product.

For the food business, the company will build at least 17 new facilities including feed mills, processing plants, processed meat facilities and a plant that would manufacture the iconic Spam.

The company through PureFoods has the license to manufacture Spam for the Philippines and the region but this has never been utilized yet.

Spam is a brand of canned cook meat from US giant Hormel Foods Corp.

This year, the company has already completed and inaugurated a new hotdog manufacturing facility in General Trias, Cavite – effectively doubling the capacity – and two feed mills, one in Mariveles, Bataan and another one in Bulacan province.

SMC has put its food and beverage businesses under San Miguel Food and Beverage Inc.