SMC net income up 24% to P1.54 B in 1st quarter

San Miguel Corp. posted a consolidated net income of P1.54 billion in the first quarter of this year, an increase of 24 percent over the P1.24 billion in 1999, amid relatively sluggish consumer demand.

Operating income jumped 22 percent from P1.48 billion to P1.81 billion as a result of broader distribution, productivity enhancements and continuing cost containment initiatives. Overall operating margins increased from 9.6 percent to 11 percent.

Volumes of most SMC's domestic businesses performed favorably during the first three months of the year, with domestic beer and liquor sales up combined with strong overall volume growth in both the packaging and food businesses. Consolidated net sales amounted to P19.9 billion, plus nine percent over P18.3 billion last year.

Financing charges this quarter were 33 percent lower at P395 million versus P587 million last year. Other income of P198 million resulted primarily from the amortization of non-compete shares while equity in earnings of P218 million came largely from CCA.

Domestic beer sales revenue for the first quarter increased 14 percent to P8.02 billion while volume grew by six percent. Operating income reached P1.3 billion up 18 percent from a year ago.

Beer International shows signs of a sustained turnaround in performance as the various brand-building and rationalization activities earlier initiated started to bear fruit. Operating losses for the first quarter dropped by 82 percent from $7.6 million in 1999 to $1.4 million this year.

La Tondeña Distillers Inc.'s net income for the first quarter amounted to P369.2 million, a 125-percent increase from P164.2 million in 1999. Operating income rose by 48 percent from P472 million last year to P699 million. Sales revenue grew by 36 percent from P2.4 billion to P3.2 billion.

Hard liquor volumes grew 26 percent due to greater distribution levels through San Miguel Beer's trade network. Bottled water volume surged 68 percent despite intensified competition from lower-priced water filling stations. Juice volumes increased by 17 percent.

Excluding the coconut oil business, consolidated volumes of the Food Group grew by 12- percent revenue increased by four percent from P3.69 billion in the first quarter of 1999 to P3.85 billion this quarter.

Prices continue to soften mainly due to the uncontrolled influx of smuggled poultry products. Combined with cost increases in soya, corn and other commodity raw materials which heavily affected the chicken and feeds businesses, the Food Group's operating income decreased by 66 percent from P186 million in 1999 to P62 million.

San Miguel Packaging Products turned in favorable overall results with volumes strongest in the glass, aluminum cans and composites businesses, with growth ranging from 21 percent to 54 percent. Metal closure volumes declined by 12 percent, while plastics volume also declined due to weak demand in the soft drinks industry. Consolidated revenue rose 12 percent to P3.4 billion from P3 billion a year ago. Operating income increased by 80 percent to P497 million.