Alaska Milk more than doubles net profit in first quarter

MANILA, Philippines - Buoyed by steady strong sales volume and manageable costs, Alaska Milk Corp., the milk manufacturing company owned by the Uytengsu family, reported a net income of P523 million in the first quarter this year, more than double the P197 million recorded in the same period in 2009.

Sales volume across the company’s core milk products continued to exhibit robust growth rates, lifting revenues to P2.98 billion, an increase of 12 percent from the P2.66 billion registered the previous year.

Alaska expects retail consumption of liquid canned milk, particularly evaporated milk, to further expand going into the seasonally strong summer months.

The company’s powdered milk business likewise delivered strong sales volume growth as well as market share gains. Extensive distribution drives in downline retail outlets alongside sustained brand-building efforts translated to a double-digit growth in sales volume for Alaska Powdered Milk Drink brand.

Sales volume of the company’s UHT line of dairy products, ready-to-drink milk and ready-to-use product, remained brisk as trade supply normalized following disruptions in production and supply chain in the aftermath of the September 2009 flooding caused by typhoon Ondoy.

Alaska said operating income amounted to P673 million, 177 percent higher than the year-ago figure.  This translated to an improvement in operating margin at 22.6 percent from 9.1 percent, brought about by the significant decline in the costs of primary raw and packaging materials, skimmed milk powder in particular. Operating income likewise grew on account of continuing improvements in operating efficiencies.

Despite heightened advertising and promotional spending to support consumer demand for Alaska Milk products, cost of sales and operating expenses fell four percent to P2.31 billion from P2.42 billion.

Higher cash balances due to higher profitability and lower working capital requirements brought net interest income  to P10.4 million, a reversal from the P1.7 million in net interest expense incurred in the same period last year.

Demand for milk and dairy products is slowly expanding as global economies recover from the global financial crisis. Suppliers and traders are anticipating prices to move sharply higher as supply remain tight following unfavorable weather conditions in Europe and Oceania, which continue to saddle milk production.