SMC income surges 10% to P3.8B in H1

San Miguel Corp. posted a consolidated net income of P3.8 billion in the first half of the year, up to 10 percent from P3.4 billion last year as its sales got a boost from the contributions of two new prized acquisitions – Coca Cola Bottlers Philippines Inc. and Pure Foods Corp.

SMC officials said the aggregate sales of all its business units surged 35 percent to P57.3 billion in six months, with CCBPI turning in P6.7 billion in May and June and Pure Foods accounting for P3.9 billion for the entire second quarter.

CCBPI, reacquired last March, is now 65 percent controlled by SMC while the purchase of 93 percent of Pure Foods was consummated last May.

During the company’s stockholders meeting last April, SMC chairman and CEO Eduardo Cojuangco said a consistent growth of 20 percent in their revenues could be expected over the next two years as contributions from their new acquisitions stream in.

In 2000, SMC posted profits on a recurring basis of P7.5 billion, a substantial 25 percent improvement form P6.016 billion in 1999. Consolidated sales reached P88.705 billion, up 17 percent from P75.619 billion a year earlier.

In the first half this year, the growth in consolidated sales resulted from the revenue gains of 18 percent in the food business; six percent in the beverage lines; and five percent in packaging.

Cojuangco added SMC will remain aggressive in taking opportunities and explore more business ventures from its acquisitions and integration. "We will look at companies that have synergies with food, softdrinks, liquor, beer and whatever we have right now which would strengthen our position and consolidate things for us," he said.

The food and beverage giant’s next target is Cosmos Bottling Corp., the country’s second largest softdrinks company, as the final terms of the buyout deal involving selling party RFM Corp. and CCBPI, along with the Atlanta-based The Coca Cola Company, is expected to be threshed out within the next five days.

Cosmos leads the RFM stable in terms of financial performance, posting sales of P5.24 billion and net profit of about P690 million last year. By comparison, CCBPI registered a net profit of P231 million in the second quarter alone, up by a strong 85 percent from last year.

With its fold-in into the SMC family, Cosmos’ operations will be integrated with that of CCBPI to piece the missing link in their distribution network as Cosmos will bring its mass appeal into the low-end segment of the industry.

La Tondeña Distillers Inc., the liquor and juice arm, of SMC, also kept its revenue flow healthy as it racked up sales revenues of P7.8 billion in the first semester, up 12 percent from a year earlier. LTDI has merged its acquisitions – juice maker Sugarland and Metro Bottled Water Corp. – to be later on spun-off and integrated with CCBPI to constitute the non-liquor operations while LTDI will retain the liquor lines consisting of the gin and rum products.

In the food business, SMC’s food group and Pure Foods are likewise harnessing each other’s strengths in processed meats and poultry feeds, which would eventually lead to a similar integration for a more strategic market positioning and operations. With these combined food operations, SMC now accounts for 74 percent of the hotdog market, 24 percent of the canned meat industry, 40 percent of poultry, 32 percent of the feed business, and 17 percent of flour milling.

Meanwhile, SMC’s flagship beer business posted an operating income of P2.53 billion in six months, slightly higher than last year’s P2.5 billion. At its international operations, operating income reached $282,000 in he first half, a 238 percent turnaround from an operating loss of $204,000 last year due to volume improvement and higher production efficiency in its breweries in Indonesia, Vietnam and China. Its Australian operations, through premium beer maker J. Boag & Sons sold 1.6 million cases and chipped in an operating income of $1.6 million during the period.