Alaska Milk income up 4.5% to P153.6M in Q1

The Uytengsu-owned Alaska Milk Corp. (AMC) reported only a 4.48-percent growth in its first quarter net income this year as higher cost of raw materials and foreign exchange costs affected its bottomline.

Net profit amounted to P153.64 million for the period, compared with P146.54 million in the same period last year.

However, sales jumped by 36 percent to P1.32 billion from only P976 million, buoyed by brisk sales across all product lines as well as the eight-percent increase in the selling price of all its milk products.

The combined sales volume of the liquid milk classic and value lines went up by 28 percent, driven by strong sales of the evaporada variant. The evaporated milk category expanded by 23 percent while the condensed milk category grew 14 percent.

The powdered milk business also posted strong sales with sales volume up 26 percent year-on-year, allowing AMC to sustain the number two position in that market.

But the combined sales volume of AMC’s UHT ready-to-drink milk business, particularly Alaska Fresh & Alaska Slim, contracted nearly 10 percent due to stiff competition with the presence of numerous lower-priced imported brands.

Meanwhile, Alaska’s Choco sales grew double-digit compared to last year, notwithstanding the decline of the chocolate-flavored milk category.

The cost of skimmed milk powder (SMP) remained high in the first quarter at $1,700 per metric tons, indicating continued high prices in the second quarter through the third quarter of 2004. Tight supply in Australia and New Zealand have kept prices firm as supply of SMP reportedly just meets export demand.

AMC said the continued strength of the Australian and New Zealand currencies against the US dollar have effectively made SMP more expensive. This is compounded by the persistent weakness of the peso against the US dollar.

SMP prices are expected to stay high in the near term with further upward pressure for the fourth quarter of the year," AMC said.

Because of this, Alaska is expecting a 10- percent decline in its profit this year.

SMP prices and foreign exchange will continue to have a material impact on the company’s operating income and profitability. Should the supply situation tighten further, this may put pressure on income from continuing operations going forward," AMC said.

The company said sales of milk products exhibit seasonality during the year, particularly for liquid canned milk products. Historically, sales in the second quarter are strong for this category due to the summer season when the use of the liquid canned milk increases during fiesta seasons. The third quarter usually slackens compared to the second quarter.