San Miguel posts 2009 income of P57.8 billion

MANILA, Philippines - Diversifying conglomerate San Miguel Corp. reported a three-fold jump in its net income last year to P57.8 billion, from P19.3 billion a year earlier, boosted by a one-time gain from the sale of a substantial stake in a major operating unit.

Last year, the company sold a 43.25-percent stake in San Miguel Brewery Inc. to Japanese partner Kirin Holdings Inc. for P19.32 billion.

In a financial report filed with securities regulators, San Miguel said consolidated revenues rose four percent to P174.2 billion while operating income grew 33 percent to P19.7 billion on higher sales of its beer and hard liquor units and the improving performance of its packaging and food businesses.

“This was achieved amidst a difficult global economic environment for much of 2009. Sound cost discipline implemented across San Miguel businesses helped sustain the company’s strong performance,” San Miguel said in a statement.

With the economy poised to recover from its downturn, San Miguel said it will continue to invest for the future and deliver value to its shareholders through strategic investments in higher-growth ventures such as infrastructure, energy, mining and telecommunications, among other sectors.

“While it may take a while to realize the expected returns from our new businesses, we are confident that these returns will drive much higher growth in the company’s revenue, profit and cash performance, ” said Ramon S. Ang, president and chief operating officer of San Miguel.

“The coming years will further reveal a significantly stronger San Miguel that is committed to its role as a major contributor to the country’s progress,” he further said.

Flagship unit San Miguel Brewery Inc. posted a net profit of P10 billion in 2009, a flat growth from the prior year, even as sales revenues went up five percent to P51 billion. Efforts to raise volumes and manage costs resulted in a three-percent growth in operating income to P16 billion. 

Hard liquor unit Ginebra San Miguel Inc. on the other hand, returned to profitability last year, turning in an income of P701 million as against a net loss of P279 million the previous year. This was attributed to brisk demand for its GSM Blue and Gran Matador products.

The Food Group ended the year with a record performance despite an overall challenging market for the food industry. Consolidated revenue inched up five percent to P77 billion, driven by strong performance from its poultry, dairy, and feeds businesses, while operating income amountded to P4.53 billion, more than double the P2.02 billion registered a year earlier.

Meanwhile, San Miguel Yamamura Packaging Group reported total yearend revenues of P19.7 billion and operating income of P1.62 billion as it continued to broaden its coverage in the Philippines and the export markets of Asia, the Middle East, Africa, Europe and North America. 

To ensure its continued growth, San Miguel is seeking shareholders’ consent to sell down more than 51 percent of the company’s stake in its core businesses in line with its diversification into heavy industries. The company will be holding its annual shareholders meeting in May.

“Partnering with world class leaders in our beer, food and packaging industries will improve our ability to focus on our new portfolio of energy, power, infrastructure and mining assets while at the same time helping fund expansion in our core businesses, Ang said.

“San Miguel’s strategy to significantly enhance and create long-term shareholder value by looking at new drivers of growth may require the further selldown our stake in core businesses. We want to be able to act with speed when an opportunity to divest at an attractive price materialized,” Ang pointed out.

San Miguel said it is seeking approval from shareholders holding common shares to waive their pre-emptive rights to allow management to issue new shares without attendant pre-emptive rights. 

“With our diversification plans now gathering pace, we want to be able to bolster our company’s capital base and gain flexibility when it comes to financing our own growth - whether this involves future acquisitions or investments. We are asking our stockholders to grow their company and their investment,” he said.

Also approved by the board was  a plan to declassify San Miguel’s outstanding capital stock from Class A and B common shares without distinction. “Given that both sets of shares have essentially the same rights and privileges, and are at present, trading at the same level, the board believes it is an opportune time to declassify. Declassification would facilitate the entry of foreign investment, “ Ang said.