San Miguel Beer mulls secondary offer

MANILA, Philippines - San Miguel Brewery Inc. (SMC), the local flagship unit of diversifying conglomerate San Miguel Corp., is planning a secondary share offer to boost its public float.

On the sidelines of SMB’s annual stockholders meeting yesterday, company chairman Ramon S. Ang said the parent firm and Japan’s Kirin Holdings, a majority shareholder of SMB with a 48.39-percent stake, are mapping out a plan to comply with the Philippine Stock Exchange’s minimum public ownership requirement for listed companies.

“We’re exploring ways to meet the requirement. We (Kirin and SMC) are in talks on how to comply with it, we don’t know yet but we will definitely do it this year,” said Ang.

Ang,however, did not indicate an issue size.

SMB, the country’s most valuable listed firm, has a free float of a mere 0.6 percent, according to stock exchange data.

Ang said the company has strong cashflow and does not need to go to the equity market to support its expansion.

He said the company has earmarked a total of $100 million or $25 million each for the setting up of four new bottling plants in Sta. Rosa, Laguna; Cauayan, Isabela; Bicol and Cagayan de Oro.

When completed, these facilities will beef up existing capacity by 30 percent.

Overseas, Ang said the company is studying the possibility of putting up a brewery in Laos and Cambodia to further strengthen its presence in Southeast Asia.

SMB is currently the market leader in Hong Kong with a market share of 30 percent and ranks second in Indonesia with a market share of 28 percent.

The company posted a consolidated net income of P3.029 billion in the first quarter this year, down from P5.79 billion recorded in the same period in 2010. Without the non-recurring income from acquisition of assets at fair value amounting to P2.99 billion, which arose from the acquisition of San Miguel Brewery International Ltd., net earnings rose eight percent.

SMB registered consolidated sales revenue of P17.53 billion, 9.4 percent higher than the P16.024 billion a year earlier. Domestic operations contributed P14.62 billion or an increase of 9.4 percent due to an 11 percent growth in volume while international operations pumped in $67 million or P2.92 billion.

Operating expenses rose 8.5 percent to P3.45 billion.

Income from operations climbed 9.4 percent to P5.06 billion with domestic operations contributing P5.02 billion and $1 million or P44 million from international operations.

Other income amounted to P136 million in 2011, a P12 million decrease from the same period last year, due to lower marked-to-market gain and other charges of international operations.

Driven by higher sales volume, domestic operations posted a 9.4 percent rise in sales revenue.

International operations reported a 14 percent jump in sales revenue, mainly due to the effect of the price increase implemented in Indonesia effective April 2010. Though sales volume was at par with the same period last year, cost of sales increased 20.4 percent due to the excise tax increase in Indonesia effective April 2010.

Owing to improved margins from Indonesia and Thailand, operating income increased by $702 thousand from the same period last year. However, higher financing costs and other charges of San Miguel Brewery Hong Kong resulted in a $1.1 million net loss, reversing the increase in operating income.