SMC issues P4-B notes to finance capital requirements

Food and beverage giant San Miguel Corp. (SMC) will issue P4-billion worth of five-year fixed-rate corporate notes to finance its working capital requirements, the company told the Philippine Stock Exchange.

SMC has entered into facility agreements with Hong Kong and Shanghai Banking Corp. Ltd. (HSBC) and a syndicate of banks for the notes issuance.

An SMC official said the money to be raised from the offering will be used for various capital requirements, including funding an aggressive regional expansion program to complement its dominant foothold in the local market.

SMC, Southeast Asia’s largest food and beverage conglomerate, recently completed the purchase of a 50-percent interest in Australia’s leading fruit juice company, Berri Ltd.

Berri, which has an enterprise value of $240 million, holds a 50-percent share of the fruit juice market in Australia and around 65 percent of the country’s fast-growing "fresh juice" segment.

Aside from juices, Berri also produces bottled water under its Kyneton Mineral Water and Summit Water brands.

SMC officials said Berri’s brands would provide a strong complement to SMC’s stable of internationally-recognized alcoholic beverages, including the flagship beer and hard liquor brands San Miguel Pale Pilsen and Ginebra San Miguel, respectively.

The officials added that substantial progress has also been achieved in its regional expansion program with successive groundbreaking activities for new facilities in Thailand, Indonesia and Vietnam.

The conglomerate exports its products to over 30 countries, mainly concentrated in the Asia Pacific region.

With significant gains in its domestic and international beer operations, SMC reported a 31-percent growth in its first semester net income this year to P4 billion.

SMC said the strong performance was driven by higher consolidated sales revenue of P81.28 billion, an increase of 13 percent from the previous level.

Consolidated operating income jumped 32 percent to P8.11 billion, largely due to higher beer volumes, the fixed cost containment of the Coca-Cola Beverage Group, and the significant improvements of the food group.

Year-to-date operating income of SMC’s domestic beer division reached P4 billion or 25 percent higher than the year ago level. Total revenues rose 22 percent to P18.3 billion on a beer volume growth of 19 percent over last year.

SMC sells nine out of every 10 bottles of beer in the Philippines with domestic sales accounting for a fifth of the company’s total revenues.

International beer sales volume, on the other hand, grew 17 percent for the first half this year with sales revenue reaching $120.1 million.