San Miguel posts 24% increase in third quarter income

MANILA, Philippines - Diversifying food-and-beverage conglomerate San Miguel Corp. said its profit rose 24 percent to P1.4 billion in the third quarter, boosted by double-digit revenue growth in its liquor business.

In a statement released yesterday, San Miguel said this further boosted its nine-month results “driven by the sustained growth of its beer and liquor units, along with higher productivity and continuing cost discipline across all businesses.”

In the nine months to September, its profit more than doubled to P57 billion from P20.9 billion reported in the same period a year ago. Excluding one-off gains, however, San Miguel’s net earnings went up six percent to P7.61 billion during the period.

San Miguel’s earnings have been boosted this year by one-off sales of substantial stakes in key operating units, part of a strategic shift into higher-growth sectors such as power, telecoms and toll roads.

The company earned P97.7 billion from selling a 43-percent stake in its flagship San Miguel Brewery to Japan’s Kirin Holdings and P38.8 billion from selling its domestic beer brands and assets to its brewery unit in April.

San Miguel owns 27 percent of Manila Electric Co. (Meralco) and controls about 43 percent with its allies. It wants to take a majority stake to support its entry into telecoms, a venture it set up with partner Qatar Telecommunications Co.

Consolidated revenues amounted to P126.5 billion, four percent higher than the previous level of P122.2 billion while income from operations rose 12 percent to P13.1 billion.

San Miguel Brewery Inc. (SMB), the flagship of the San Miguel Group, reported a net income of P7.17 billion, up two percent from P7.01 billion. Net sales improved 4.9 percent to P36.95 billion on higher volumes, effective cost-management and stable raw material prices.

With the San Miguel Octoberfest kickoff in September, SMB expects volumes to further rise in anticipation of increased consumer spending during the Christmas holidays.

Revenues from overseas beer operations fell five percent to $202 million from $213 million. From an operating loss of $1.28 million, the international beer unit registered an operating income of $2.72 million.

Hard liquor unit Ginebra San Miguel Inc. (GSMI), on the other hand, more than doubled its net earnings to P580 million from a meager P199 million. Net sales jumped 27 percent to P14.12 billion from P11.15 billion while operating income surged 41 percent to P872 million.

“The strong performance resulted from sustained improvements in alcohol production and product distribution costs,” San Miguel said.

Meanwhile, the group’s food business maintained its strong sales momentum, registering sales revenue of P55.9 billion, or five percent higher than in the same period last year, while operating income increased 51 percent to P2.31 billion.

The group’s packaging business registered net sales of P14.42 billion, slightly lower than the year ago level of P14.75 billion. Strong demand for glass, plastic, metal and PET businesses, however, resulted in a 41-percent rise gain in operating income to P1.4 billion.