San Miguel expands flour milling capacity ahead of ASEAN integration

MANILA, Philippines - The flour milling unit of diversified conglomerate San Miguel Corp. (SMC) is expanding its capacity to cater to increasing domestic and regional demand.

The expansion of San Miguel Mills Inc.’s (SMMI) flour milling capacity also forms part of SMC’s preparation for the Southeast Asian economic integration, the company said in a disclosure to the stock exchange.

The project will involve the expansion of SMMI’s existing milling facility in Batangas starting September and the construction of two greenfield facilities in other strategic areas, which will improve capacity by 1,800 metric tons per day.

“Our flour business has been showing consistent growth these past few years. Now we are approaching a capacity level that will trigger a planned expansion program,” said SMC president and chief operating officer Ramon S. Ang.

“This expansion will allow us to meet the growing demands of the domestic and regional flour market.”

The expansion puts SMMI in a better position to aggressively strengthen its export business, particularly with the full implementation of the ASEAN Economic Community in 2015, Ang said.

The ASEAN Economic Community will facilitate free flow of goods, services, labor, investments as well as capital in the economic bloc starting 2015.

SMMI said its overall strategy is to grow the domestic market and at the same time penetrate the regional flour market.

Ang said the flour industry has benefited from the sturdy Philippine economy with per capita consumption of flour growing to 17.5 kilograms, which still lags behind its Southeast Asian neighbors.

“In terms of technology, the flour mills we are building will be more advanced than any in the country today,” Ang said, adding the facilities will be able to produce many types and grades of flour, including some not currently available locally.

SMMI also targets to help stabilize or drive down local flour prices as well as prices of commodities using flour.

Once operational, the new facilities will be integrated with SMMI’s existing mill. It will also benefit from the recently opened Golden Bay Grain Terminal in Batangas, resulting in lower ocean freight cost of wheat as well as more flexibility in terms of the variety of wheat types.

Ang said a number of European firms have expressed their intent to partner with SMMI in building the facility.

In the first quarter, the flour and value-added businesses remained major contributors to the bottom line of SMMI’s parent firm San Miguel Pure Foods Co. Inc. (SMPFC).

Net income of SMPFC jumped 24 percent to P870 million while consolidated revenues rose five percent to P24.2 billion from a year ago, driven by strong sales and higher selling prices.