The country’s most dominant food and beverage conglomerate, SMC stands to reap the benefits of the corporate acquisitions and group restructuring program since last year to banner higher net earnings ranging from P6.9 billion to P7.79 billion by the end of 2002, up from the P6.468 billion net income in 2001.
"San Miguel remains quite attractive given the gains still to be reaped from the integration of Coke, Cosmos and Pure Foods," an Abacus Securities report said.
It added that the benefits of the restructuring and reorganization have begun to slowly flow through on the company’s bottom line, adding that SMC is also well positioned to expand locally or in other parts of the region.
Foreign stockbrokerage house UBS Warburg pointed out that the gains in the fold-in of Coca Cola Bottlers Philippines Inc. were already evident during the second quarter as the softdrink firm registered strong unit sales and EBIT (earnings before interest and taxes) margins compared to the same summer months over the past three years.
KGI Securities, for its part, said with the reduction of its receivables, SMC would be able to maximize the use of its cashflows, not only for its flagship beer operations but also for other units.
It estimated that beer volume could grow by a steady three percent should the service and manufacturing sectors recover in the next two quarters while liquor volume – through La Tondeña Distillers Inc. – is seen to expand by eight percent.
Strong growth outlook is also expected for CCBPI and its absorbed unit, Cosmos, with their volume mix distribution, further capitalizing on the surge in demand towards year-end with the onset of the El Niño weather phenomenon.
KGI added the food group also remains a strong contributor to sales growth due to the healthy volume from products such as pork, beef, feeds and processed meats.
In the first half of 2002, SMC’s bottom line earnings of P3.01 billion were still lower by 20 percent from the same period last year due to additional costs related to the group-wide integration, although sales had jumped by 25 percent to P66.1 billion.
As part of the corporate integration and group restructuring, SMC consolidated all non-alcoholic products, including that of Cosmos, under CCBPI’s umbrella and merged Pure Foods with SMC’s processed food operations, forming a new company named San Miguel Pure Foods Co. – Conrado Diaz Jr.