Alaska net income jumps 34% to P404M in ’06

Uytengsu-owned Alaska Milk Corp. posted a net income of P404 million last year, up 34 percent from the P301 million reported in 2005 as sales volume expanded across all core product categories.

In a financial report filed with the Philippine Stock Exchange, Alaska said the 2006 net income is equivalent to an earnings per share (EPS) of P0.43, P0.10 higher than the EPS of P0.33 last year.

Revenues likewise increased nine percent to P5.92 billion from P5.41 billion while operating income grew 48 percent to P516 million.

Cost of sales and operating expenses rose seven percent to P5.4 billion from P5.06 billion primarily due to increased sales volume and higher consumer-based promotions.

Alaska said lower foreign exchange cost helped cushion the uptick in world prices of milk powder.

Global shortages of milk powder, coupled with strong demand in Asia, pushed skimmed milk powder prices to over $3,400 per metric ton. Prices rose sharply on strong European demand for dairy products and the diversion of milk to maintain cheese and liquid milk supplies in the domestic market.

Alaska, however, managed to post higher sales and profit despite the 11-percent decline in retail grocery consumption of milk products (evaporated, condensed and powdered milk).

The market’s contraction was attributed to the general slowdown in consumer spending in the first half of 2006 brought about by the implementation of the expanded value added tax (E-VAT) law and the upsurge in oil prices which took a toll on consumers’ purchasing power.

However, the rate of decline slowed down in the fourth quarter of the year largely influenced by the improvement in consumption levels during a seasonally strong Christmas season, especially for liquid canned milk.

Alaska said it continued to strengthen its market leadership in both the evaporated and condensed milk categories, with market shares up from the previous year.

Sales volume of the company’s liquid canned milk business posted strong double-digit growth rates versus year-ago levels, driven by the robust performance of Alaska Evaporada and Alaska Condensada in the economy market.

Similarly, sales volume of the powdered milk business grew year-on-year, outperforming the category’s contraction. Market share of Alaska Powdered Filled Milk remained stable.

Alaska’s line of UHT products, on the other hand, sustained its growth momentum in 2006, driven by the strong shelf offtake of Alaska Crema.

The company recently obtained incentives from the Board of Investments for its new instant filled milk powder processing plant. The project has been awarded "pioneer status" which qualifies it for a six-year income tax holiday, duty-free importation of capital equipment and other financial and non-financial incentives.