Pure Foods profit up 2% to P4.2B

MANILA, Philippines - The food unit of diversified conglomerate San Miguel Corp. (SMC) said its earnings grew last year on the back of strong sales.

Parent firm SMC, for its part, has tapped five banks to raise $1.3 billion for general corporate purposes.

In a disclosure, San Miguel Pure Foods Co. Inc. (SMPFC) said its profit rose two percent to P4.2 billion last year.

Consolidated revenues jumped seven percent to P95.8 billion, a record performance, given “robust sales, improved efficiencies and the continued expansion of the distribution network,” the company said.

Despite difficulties like the volatility in cost of raw materials, the food company recorded better sales in the second half, SMPFC president Francisco S. Alejo III said.

He said SMPFC also benefited from “strategic cost management efforts, introduction of new products and successful marketing initiatives that led to better offtake.”

Specifically, the value-added business recorded a solid performance due to steady volume growth in core brands Purefoods, Star, Magnolia and San Mig Coffee.

SMPFC said the agro-industrial business composed of basic meats and poultry remained strong despite high costs early last year while the flour business continued to be a major contributor.

“We are optimistic that the momentum we gained in the second half of 2012 will continue throughout 2013,” Alejo said.

Last year, SMPFC started the construction of a P3-billion grain terminal facility in Mabini, Batangas to cut freight and handling costs of raw materials. It will start commercial operations in the second half next year.

Meanwhile, Reuters reported that conglomerate SMC tapped five banks for a $1.3-billion long-term syndicated loan for general corporate purposes.

In January, SMC announced that it is looking to pay off its debts through a $1-billion five-year loan that will repay the $1-billion, five-year funding it secured from banks in 2010. It is also looking at generating $300 million for its working capital.

The debt refinancing program aims to “prudently manage its capital and balance sheet structure by taking advantage of the opportunities presented by prevailing market conditions,” SMC earlier said.

SMC was reportedly in talks with Deutsche Bank and Standard Chartered Bank to draw a $650-million, one-year loan to buy back $600-million exchangeable bonds due next year.

Local firms are tapping banks to pay debts early or lengthen the maturities of their debts amid the low interest rate environment.