Philippines: San Miguel doubles net income in first quarter of 2007

San Miguel Corp. sustained its 2006 pace of growth in the first quarter of 2007, according to company’s press release, May 8. With the sale of stake in Coca Cola Bottlers Philippines, Inc. (CCBPI) to The Coca Cola Company, San Miguel Corporation’s consolidated net income in the first quarter of 2007 amounted to P4.33 billion, double that of the same period last year.

The Company‘s gain is largely attributable to recognition of the balance of profit on CCBPI’s containers following the deconsolidation of CCBPI.

Excluding the revenue contribution from CCBPI, sales revenue reached P55.4 billion, 7% higher than 2006. Consolidated operating income of P3.8 billion was 24% lower than last year as external factors continued to affect the performance of Ginebra San Miguel Inc. which was weighed down by the absorption of an 8% increase in excise taxes effected in January 2007. SMC’s packaging company suffered from the cyclical downtrend for glass bottle requirements, while National Foods, Limited, SMC’s dairy and juice subsidiary in Australia absorbed cost increases as a consequence of the continent’s prolonged drought.

Domestic Beer Operations’ operating income reached P2.70 billion, 13% higher than last year as the business benefited from lower raw material and fuel prices. Revenue finished at P10.5 billion.

International Beer Operations recorded 2% higher volumes in the first period with corresponding sales revenue of US$68.3 million. North and South China operations together with Vietnam, Australia, Thailand, and export volumes outpaced last year’s performance–the result of highly focused and purposive selling programs at the outlet level.

Ginebra San Miguel Inc. reported 7% higher volumes from 2006 and delivered revenue of P2.98 billion. Sales of major brands picked up in the quarter, with GSM Blue, Vino Kulafu, and Gran Matador sustaining double-digit growths.

San Miguel Food Group posted consolidated sales revenue of P14.7 billion in the first period, at par with 2006. Improved efficiencies, lower raw material prices and fixed cost management helped carry operating income higher by 7% at P540 million.

National Foods, Ltd. in Australia generated revenue of AU$496 million, 12% higher than last year with volume improvement achieved in all categories.

The Board of Directors of San Miguel Corporation approved the increase in its authorized capitalization from the current 4.5 billion to 7.5 billion shares, equivalent to P37.5 billion at par value, to fund the group’s acquisitions and expansion into other businesses as well as pay down debts and finance possible share buy-back.

This will enable the company to issue 1.5 billion preferred shares as part of the capital raising exercise. In 2005, San Miguel sought a waiver for the shareholders’ pre-emptive rights on the “issuance of any class of preferred shares related to equity-linked or other securities, for property needed for corporate purposes.”

In an earlier disclosure, the company said that it is planning to venture into other industries namely power, mining, infrastructure, water, and other utilities to tap new engines of growth.

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