SMC net income up 53% in Q3

San Miguel Corp. posted another strong performance in the third quarter with most of its business units registering improved sales and income contributions, the company said in a statement yesterday.

The country’s largest food and beverage conglomerate reported that in the third quarter, its operating income and net income both surged by 53 percent to P2.99 billion and P1.56 billion, respectively.

Leading the income drivers during the period were SMC’s flagship domestic beer division, beverage unit Coca-cola Bottlers Philippines Inc. (CCBPI), the glass and metal segments of its packaging subsidiary, and the feeds and processed meat units of the Food Group.

With the favorable third quarter results, SMC’s nine-month operating income rose 27 percent to P9.1 billion while EBITDA (earnings before interest, taxes, depreciation and amortization) was estimated at P14.6 billion or 25 percent more that the previous year.

On the other hand, the company’s consolidated net income of P4.56 billion in the first three quarters of 2002 was still 4.7 percent less than the P4.787-billion net earnings a year earlier, although this was already an improvement from the 20-percent income drop during the first semester.

SMC suffered a pronounced profit squeeze in the early part of the year due to additional costs related to the group-wide integration, which include the implementation of various programs to align operations, distribution, processes and systems with the entire SMC network.

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.

"With the strong operating results for the first nine months of the year, SMC expects to sustain its growth momentum approaching the peak season in the last quarter, and remains focused on meeting its full-year targets," SMC officials said.

In the past quarter, consolidated sales revenue went up by only three percent to P32.9 billion but for the nine-month period to September, net sales revenue of the SMC Group touched P99 billion, 16 percent better than the past year, powered by the additional output from the new acquisitions.

This year, stock analyst said they expect SMC to recover from the drop in profit last year to post a healthy income increase averaging about 13.5 percent.

Research studies by the stockbrokers said 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.

Earlier this year, SMC officials led by chairman and CEO Eduardo Cojuanco Jr. said they expect to sustain the sales uptrend within the next couple of years, sticking to a target growth of an average 30 percent in total sales.

For the first nine months of 2002, SMC’s domestic beer division posted a 10-percent gain in operating income to P3.4 billion, on the back of an eight-percent growth in sales to P19.9 billion.

Liquor subsidiary and similarly listed firm La Tondeña Distillers contributed P1.2 billion in net income, up 41 percent from a year ago while the beverage arm CCBPI pumped in 26 percent more in operating income at P1.6 billion.

SMC’s Packaging Products tallied nine-month sales of P11.4 billion or 13 percent better than last year, bringing its year-to-date operating income up 14 percent to P1.3 billion.

Meanwhile, the SMC Food Group brought in revenues of P27.5 billion in three quarters, higher by 24 percent, with an operating income level of P1.3 billion, as volume growth were evident in feeds, flour, basic meats and margarine.