SMC: The P1.5 trillion company

San Miguel Corporation (SMC) has done something stupendous. For every P100 of annual economic production, P6.80 is now churned out by San Miguel

In 2022, the beer, food, power and infra industrial conglomerate registered revenues of P1.506 trillion (P1,506 billion), the highest in its 133-year history.

SMC’s 6.8 percent share of GDP is a breathtaking 39 percent increase from 4.9 percent in 2021 and the largest and best ever delivered by the company.  Previously, SMC’s share of GDP had averaged just 5 percent.

If every P3 million could generate one job (it does), P1.5 trillion in revenues easily mean 500,000 jobs are generated by San Miguel’s diversified businesses.

At the retail level alone, more than one million sari-sari stores in the archipelago’s 7,600 islands carry a San Miguel product – beer, gin, coffee, chicken, Purefoods hotdog or corned beef, Magnolia tea or juice, to name a few.

The sharp expansion of SMC’s contribution to total economic output of the nation demonstrates the conglomerate’s increasing importance to the economy and its pervasive influence in making life better for most Filipinos.

No other Filipino company has such a sprawling presence and unmatched leadership in nearly every strategic sector of the economy – petroleum refining and marketing (No. 1), power generation (No. 1), food and beverages manufacturing (No. 1), infrastructure (No. 1 in tollways), port and airport development (No. 1), packaging (No. 1, from glass to metal, carton, plastic and back), cement (No. 1), storage battery production (No. 1 with a 1,000-MWh Battery Energy Storage System or BESS) and banking (Bank of Commerce, No. 10).

Its foray into BESS, the company says, is “part broader strategy to stabilize supply throughout the grid, and help pave the way for the integration of renewable power in the future.”

San Miguel generates 4,719 megawatts of power –19 percent of the national grid, 26 percent of the Luzon grid, land 7 percent of the Mindanao grid. If SMC were not in the business, there would be brownouts averaging five hours daily.

In infra, SMC has rights to 964 kms of roads and operates 78.28 percent of the country’s total tollways.

The group employs 70,000 and operates more than 100 factories or production facilities in the Asia Pacific.

SMC also spends the most for CSR (corporate social responsibility) projects.  It is spending P2 billion to clean and rehabilitate the notoriously stinking Pasig River, the national capital’s major waterway. That’s P2-billion money SMC does not even need to spend for a river.  The Tullahan portion of the river alone took P1 billion to rehab.

For COVID response, SMC spent P13 billion.

The biggest single investment in the Philippines, by any company, Filipino or foreign, is the $15-billion San Miguel New Manila International Airport. Dubbed Asia’s most modern when completed, the airport has Phase I that can handle 35 million passengers annually, to be expanded to 100 million passengers as demand expands.

Since aviation supports 3.4 percent of GDP, the Bulacan airport will bring San Miguel’s total contribution to the economy to more than 10 percent or P10 of every P100 of value added output.

In size, scale and scope of SMC operations, no company comes close.

The next largest is the Henry Sy family holding company SM Investments Corp. Its 2022 revenues of P553.8 billion, up 28 percent from 2021, is only 2.5 percent of GDP.

Yet, in market cap, SMIC is considered the most valuable, with P1.099 trillion. SMC is valued by the market at only P260 billion, fifth largest among the conglomerates.

SMC’s 2022 performance amply demonstrates the advantages of its diversified business structure and operational strategies.

More than 60 percent of the growth of the past decade and a half is largely the result of the massive diversification program uncorked by SMC president and CEO Ramon S. Ang in 2017.

SMC began in 1890 as a single product company, beer. One of the world’s best, SanMig is still a cash cow and is SMC’s single most profitable product. Demand is back, with volume sales of 224.5 million cases in 2022, up 10 percent.

In 2022, beer delivered P21.75 billion in profits (SMB is owned 48 percent by Kirin of Japan), better than the P9.2-billion profits of Foods, P6.7 billion of Petron, P4.54 billion of Ginebra, P3.1 billion of global Power and P1.64 billion of Packaging. Beer, after all, is 99 percent water.

SMC’s 2022 P1.5-trillion sales revenue is a whopping 60 percent jump from its P941-billion sales in 2021, and exceeded the pre-pandemic previous record of P1 trillion. The 60 percent increase wiped out the 6.3 percent decline in revenues in 2021 compared with 2019.

Every day, in the morning, you wake up with a cup of coffee in hand, turn on your lights, drink water or take a shower, take the MRT, drive your car, use the expressway to avoid traffic, gas up your car, visit the supermarket or the public market or fly to Boracay – all these activities are a product or a service provided by San Miguel.

SMC CEO Ramon Ang enthuses:

“Our strong top line performance is a clear indication of our economy’s continuous recovery as well as the strong consumer demand for our products and services. While challenges remain, we’re confident in the measures and programs we’ve put in place to weather these. We remain strongly committed to executing on the long-term growth strategy we’ve laid out for our company, that will also significantly benefit our country.”

Well done, Mr. RSA.

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