Philippines: San Miguel Q1 net income up 7 % on overseas growth

San Miguel Corp (SMC), Philippine food and beverage giant, will focus on increasing efficiency and sustaining growth this year after a series of ambitious acquisitions abroad, its chairman, Eduardo Cojuangco, said Tuesday, May 9, according to a statement of Agence France-Presse.

On May 9 San Miguel Corp reported net income in the first quarter hit 2.17 billion pesos ($42 million), 7% increase from the same period last year, as foreign acquisitions boosted sales.

Speaking at the annual SMC stockholders' meeting, Chairman Eduardo Cojuangco said "management's focus over the next few years will be to help build long-term value for San Miguel shareholders."

"With all the moving parts in place, we now shift our focus from an outward-looking, expansionist phase to one characterized by strengthening organic growth and enhancing operating efficiency," he said. "We need to drive our cash flow and strive for continual improvement of our core working capital," he said. "Our priorities now are to sustain all the gains we have made over the last eight years and build on them" he said, referring to the expansion into Asia Pacific countries over the past nine years.

Cojuangco cited the recent acquisition of National Foods of Australia which included Lactos, a specialty cheese company. He said there was tremendous potential in soft drinks in Indonesia and Thailand where two plants are already on stream with two other plants in South China and Vietnam soon to follow.

Aside from National Foods, SMC acquired Australian fruit juice firm Berri Ltd and King's Creameries and Guolene Packaging Companies of Malaysia in 2005.

It forged a joint venture for the purchase of Del Monte Pacific and the 115-year-old San Miguel has breweries in China, Vietnam, Indonesia, Australia and Thailand and packaging plants in China, Vietnam and Malaysia.

SMC president Ramon Ang said the company's international operations were doing better than expected.

Asked if San Miguel would halt future acquisitions, Ang said they would still "evaluate if there is an opportunity" to expand further.

Analysts are forecasting a net profit of around 9.225 billion pesos this year for San Miguel, up 2 percent from 9.03 billion pesos in 2005, according to Reuters Estimates.

San Miguel's operations account for about 3.4 percent of Philippine gross domestic product and contributes about 5.6 percent of state tax revenues. San Miguel, which has a market value of around $4.9 billion, is 20 percent owned by Japan's Kirin Brewery Co Ltd

The company's B shares , which are open to foreign investors, finished down 1.19 percent at 83 pesos on Tuesday, tracking a wider 3 percent market fall.

The B stock is down around 6 percent since the start of the year, sharply underperforming the stock market's 20 percent climb in that period. San Miguel's A shares finished 0.78 percent lower at 64 pesos on Tuesday.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .