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Sans nonrecurring gains, SMC H1 income up 7%

CONGLOMERATE San Miguel Corp. (SMC) saw its first half profit fall 89 percent from its year ago level, when it booked extraordinary gains from the sale of a stake in San Miguel Brewery Inc. (SMB).

In a statement, SMC said net income fell to P6.28 billion from P56.25 billion in the January to June period in 2009.

However, excluding nonrecurring items, along with foreign exchange gains, SMC’s bottomline grew 7 percent, it added in its statement.

The company posted a P55.63-billion net income in the first half of last year when it recorded one-time gains from the sale of a stake in SMB to Japanese brewer Kirin Holdings.

The company further reported that its foray into power generation contributed about 11 percent to its profit for the first half of the year. Equity in earnings of affiliates also increased over a fifth to P1.09 billion, propelled by the contribution of earnings from power distributor Manila Electric Co.

SMC power businesses—which include the Sual, Limay and San Roque power plants—posted revenues of P24.1 billion for the first half in review contributing P699 million to the conglomerate’s consolidated net income.

SMC said operating income was aided by the strong results of SMB and liquor unit Ginebra San Miguel. SMC said consolidated operating income rose 40 percent to P12.1 billion and consolidated sales revenue ended 8 percent higher to P91.9 billion.

The company said its consolidated recurring cash flow, as measured by earnings before interest, taxes, depreciation, and amortization, grew 41 percent to P18.5 billion.

Domestic liquor volume, led by flagship products Ginebra San Miguel Gin and GSM Blue, rose 9 percent resulting in a 2- percent increase in sales revenues to P11.2 billion. Net income jumped over a quarter to P538 million.

Higher revenues, combined with stable raw material costs, yielded a 40-percent increase in consolidated operating income to P862 million.

The food group, through San Miguel Pure Foods Inc., delivered higher consolidated revenues of P38 billion for the first semester. SMC is still in the process of evaluating two bidders, reportedly the Gokongwei group’s Universal Robina Corp. and the Campos group, for purchase of a 49-percent stake in San Miguel Pure Foods.

SMC president and chief operating officer Ramon S. Ang had earlier said the listed food subsidiary has an enterprise value of $1.8 billion.

Meanwhile, San Miguel Yamamura Packaging Group’s consolidated revenues rose 13 percent to P11.5 billion for the period with the increase in glass volumes, strong performance from Malaysia, new contracts in Australia and growing export volumes.

SMC has been aggressively expanding outside its core food and drinks business into higher growth sectors such as infrastructure and mining.

Apart from its power ventures, SMC has made investments in toll roads such as Tarlac, Pangasinan, La Union expressway, and North Luzon East Expressway as well as in Caticlan International Airport near Boracay Island and Metro Rail Transit Line 7.

It is also plans to form a consortium with the Philco Aero Group to participate in the bidding for the construction and upgrading of the Diosdado Macapagal International Airport in the Clark Free Port Zone, Pampanga.

SMC said late last month that it plans to raise a minimum of P75 billion through the sale of shares to fund new investments and acquisitions.

Written by Miguel R. Camus / Reporter

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