SMC to reap dividends from expansion in 5-6 years

MANILA, Philippines - Diversified conglomerate San Miguel Corp. (SMC) will start recognizing additional income streams from its expansion into new businesses within five to six years, its top official said.

“Over the next five to six-year period, we will see the completion of many of our major projects and begin realizing revenues derived from these,” said SMC chairman and CEO Eduardo M. Cojuangco Jr.

The strong and steady performance of its core food and beverage units has allowed the conglomerate to focus on creating its footprint in toll road, oil refinery, power and airport businesses, he said.

New revenues will come from the completion of the Tarlac-Pangasinan-La Union Expressway (TPLEx), the Bataan oil refinery upgrade, the expanded Boracay airport and two power plants.

“In infrastructure, projects essential to our master plan are firmly in place,” Cojuangco said.

The first phase of TPLEx, which traverses from Gerona in Tarlac to Carmen in Pangasinan, will start operations late this year.

The 88-kilometer toll road will boost local tourism and lower transportation cost of goods for farmers in Northern Luzon, Cojuangco said.

Also, subsidiary Petron Corp. is set to complete the $2-billion Bataan refinery upgrade late in 2014.

“The Petron refinery upgrade will allow us to convert low-value fuels into high-margin products and petrochemicals,” Cojuangco said.

SMC also allotted $300 million for the redevelopment of the Caticlan airport and adjacent lots. Caticlan is the gateway to the world-famous Boracay Island.

For power projects, SMC is pursuing two new power plants in Davao and Bataan to increase the capacity of country’s inadequate power supply, Cojuangco said.

“The excellent operating results from our beer, food and packaging businesses have allowed us to now direct our capital and our attention toward growing businesses where we have a competitive edge and major opportunities in the future,” Cojuangco said.

In 2007, the conglomerate started selling parts of key businesses to fund its diversification from the traditional food and beverage businesses into high-growth and capital-intensive sectors like power generation, mining, infrastructure and telecommunications.

So far, around 70 percent of the company’s revenues are already coming from new businesses.

Other infrastructure projects of SMC are Skyway Stage 3, the P15.52-billion Ninoy Aquino International Airport (NAIA) Expressway and the $1.43-billion Metro Rail Transit-7.