MANILA, Philippines — San Miguel Food and Beverage Inc. intends to raise the prices of some of its products this year to beef up profitability and recover losses from higher imported raw materials and foreign exchange.
“In our case, we grew our revenues in the first quarter by 11.9 percent, but even if you look at our volumes, it is better than similar period last year. We think it is a result of greater demand for our type of product. Where we are down is the net income because there are a lot of preoperating expenses and also because of the movement of forex which has impacted on the cost raw materials, the imported raw materials,” San Miguel Purefoods president Francisco Alejo said.
“We should be able to recover from that. We have three quarters to go for making those adjustments which may include some degree of price increases so we can pass on some of the increases in our cost,” Alejo said.
San Miguel under its food and beverage business produces popular household brands like Purefoods for processed and canned meats, Star and Dari Creme for margarines, San Mig Coffee for coffee, Magnolia for chicken, ice cream, and dairy products; and Monterey for fresh and marinated meats, among others.
The company’s net income in the first quarter stood at P1.4 billion, seven percent lower than last year, primarily due to foreign exchange losses caused by the weakening of the peso against the dollar along with mark-to-market losses from raw material imports.
Without the foreign exchange impact, net income for the period would have been at P1.5 billion, the company said.
San Miguel in November last year decided to merge its food and beverage subsidiaries through a P336 billion swap of SMC’s shares in beer and other beverage business.
Alejo said the company is now organizing its international operations by “bringing in people who are very familiar with markets abroad.”
“We see the opportunity because of the number of Filipinos, especially in the US. So today we’re already doing tolling for some of our products. Ice cream is also being produced in Italy, our corned beef is being produced in Brazil, so we”re able to export our products in those markets where we feel there is demand or opportunity to create demand for our
“The strategy that we are doing is that we’re trying to test the market. If we feel that there’s volume that we can develop in those markets, then we will certainly look into building our own facilities,” Alejo said.