SMC to invest $300M for ships

MANILA, Philippines - Diversified conglomerate San Miguel Corp. (SMC) plans to invest roughly $300 million to acquire several large vessels for its grains, soybean meal and flour importing operations.

The Panamax vessels SMC is eyeing would significantly cut freight costs of units like San Miguel Pure Foods Co. Inc. (SMPF) to optimize operations, even as the company aims to improve market share and sales volume, executives said yesterday.

SMC Shipping and Lighterage Corp. is conducting a study to buy six Panamax ships worth $50 million each, said SMC president and chief operating officer Ramon S. Ang.

The company needs at least six Panamax ships with a payload capacity of 60,000-85,000 metric tons (MT) to handle the import volume.

Ang said the SMC Group spends around $13 per MT for freight, but the use of Panamax vessels would allow it to save $3 to $5 per MT or around $10 million in annual savings as SMPF requires around two million MT of flour wheat, feed wheat and soya meal a year.

In November, SMPF started the operations of its P3-billion grain terminal in Batangas. The Golden Bay Grain Terminal is expected to deliver $6 million in annual savings that would reduce production costs and improve the profitability of SMPF.

SMPF intends to improve its performance this year through operational efficiencies and strong sales.

“We will increase our market share and the volume of all products like processed meat and poultry,” Ang said.

SMPF controls 60 percent of the market for hotdogs, around 40 percent for poultry, 40 percent for feeds and 19 percent for flour.

“We will try to expand and try to increase at least double digit the volume. And we will keep on making sure the efficiency of the operation will be there,” Ang said.

“We want to ride on the momentum of the improvement in the economy. We are relying on increased consumption,” said SMPF president Francisco S. Alejo III.

Net income attributable to the equity holders of SMPF surged 24 percent to P870 million in the first quarter, while consolidated revenues rose five percent to P24.2 billion in the first quarter from a year ago due to strong sales and higher selling prices.

“This trend will continue for the remainder of 2014,” Alejo said.

Ang said the growth momentum would be supported by SMPF’s strategy of moving into value-added products like processed meats.

Parent firm SMC is into power (SMC Global Power Corp.), beer (San Miguel Brewery Inc.), packaging (San Miguel Yamamura Packaging Corp.), liquor (Ginebra San Miguel Inc.), petroleum (Petron Corp.), airline (Philippine Airlines) and various infrastructure projects nationwide.