SMC posts P20.1-B income in 2010

MANILA, Philippines - Diversifying conglomerate San Miguel Corp. (SMC) posted net earnings of P20.1 billion last year, sharply lower than the P57.8 billion recorded in 2009 boosted by a string of huge asset sales.

In 2009, SMC sold a 43.25-percent stake in San Miguel Brawery to Japanese partner Kirin for P19.32 billion.

In a financial report filed with securities regulators, SMC, however, said that without non-recurring items, net profit was 101 percent higher than the previous year, mainly driven by improved volumes in its food, beverage and packaging businesses and robust revenues from its power generation subsidiaries.

SMC said its consolidated sales revenue grew 41 percent to P246.1 billion, with P45.7 billion coming from its power generation business. This resulted in consolidated operating income of P34.8 billion, up 77 percent from a year earlier.

“Our traditional businesses have held their own. Each of our businesses stepped up to the plate and did what was expected of them,” said Eduardo M. Cojuangco Jr., chairman and chief executive officer of SMC.

 “We are still in the very early stages of our diversification strategy, but our energy business is pulling its share of the weight. In a year or so, energy could be a major contributor to SMC,” he added.

Driven by strong fourth quarter sales, San Miguel Brewery Inc.’s domestic sales volume rose five percent to 184 million cases, resulting in a nine percent hike in revenues to P55.8 billion. Operating income stood at P18.8 billion, up 17 percent on account of higher volumes and favorable raw material prices.

International beer sales volume, on the other hand, fell to 37 million cases due to difficult market conditions in its largest overseas beer market, China. San Miguel Brewing International Ltd. ended the year with consolidated sales revenues of $270 million.

Hard liquor unit Ginebra San Miguel continued to deliver positive results with sales revenues climbing 16 percent to P22.7 billion on the back of a seven percent hike in volumes to 39 million cases. As a result, operating income went up 40 percent to P1.5 billion.

Revenues from the group’s food business increased by only four percent to P80.4 billion while operating income expanded by 30 percent due to favorable raw material prices in poultry, basic meats, flour and dairy.

Meanwhile, San Miguel Yamamura Packaging Group registered revenues of P23.4 billion, 19 percent higher than the previous year, on the back of improved volumes and contributions from Cospak, its Australian packaging firm. Consolidated operating income rose 26 percent to P2 billion.

SMC’s four power plants, namely the Limay combined-cycle power plant, the Ilijan natural gas-fired power plant, Sual coal-fired plant, and the San Roque hydroelectric power plant, generated an estimated 11.1 million megawatt-hours in 2010. As a result, 2010 revenue and operating income amounted to P66.1 billion and 16.2 billion, respectively.

The power companies, now under holding firm SMC Global Power Holdings, were consolidated into SMC’s books during the third quarter of 2010.

SMC Global Power is now the largest power producer in Luzon in terms of installed capacity, accounting for over 29.2 percent of the Luzon grid and 21.7 percent of the national grid.

SMC is confident about its long-term prospects particularly with the full consolidation of Petron, the country’s top oil refiner, into its financial books this year.

Its infrastructure projects, namely the Caticlan Airport, the Tarlac-Pangasinan-La Union Expressway, and the MRT-7 Railway, are in various stages of development and are seen as major contributors in the future. SMC also has interests in three mines in South Cotabato.

“Our portfolio is obviously more diversified, but the priorities are the same. We’re focused on growth; growing our business as best we can,” Cojuangco said.