Philippines: San Miguel Corp. Sustains Growth Momentum in 2006

Apr. 12, 2007

San Miguel Corporation (SMC) reported another strong performance in 2006 amid slower growth in incomes. Consolidated net sales revenue reached P250 billion, which was 10% higher than 2005.

Dampened consumer demand continued up to the fourth quarter of 2006, partly due to the strong typhoons that hit the Philippines. Despite weaker consumer spending, there was however marked improvement in food group sales and significant volume recovery in the liquor business.

Consolidated operating income likewise grew 18% to P20.6 billion attributed primarily to the full year consolidation of National Foods and savings generated from group-wide cost containment measures.

Consolidated net financing charges mainly from the acquisition of NFL amounted to P5.0 billion, 28% more than 2005. This was however partly offset by a stronger peso in 2006 compared to end-2005, delivering a consolidated net income that was 17% above 2005 at P10.6 billion.

Domestic Beer Operations delivered P9.52 billion in operating income up 15% from 2005 on account of improved margins and prudent management of manufacturing costs. While 2006 volumes came in below the previous year as demand was affected by reduced consumer spending, revenues reached P39.9 billion.

In the International beer operations, 2006 volumes rose 8% with corresponding sales revenue of US$299.2 million 5% more than 2005. The performance was achieved at the back of strong volumes from operations in Greater China and the export business. Consolidated operating income reached US$4.36 million as a result of operational efficiencies and sustained cost control measures.

Meanwhile, San Miguels hard liquor subsidiary, Ginebra San Miguel Inc., posted a 17% volume improvement in 2006 fuelled primarily by the strong sales of GSM Blue and Gran Matador. Sales revenue of P12.4 billion was likewise 21% above the previous year. However, higher cost of molasses and packaging materials resulted in a lower operating income of P773 million.

San Miguel Food Group posted consolidated sales revenue of P64.0 billion a 5% increase from 2005 despite lost sales opportunities brought about by typhoons Milenyo and Reming in the fourth quarter. The performance was nonetheless encouraging as volume growth came from both existing and new businesses. Operating income totaled P2.83 billion 38% more than 2005 as breaks in raw materials prices and fixed cost management complemented improvements in operational efficiencies.

In Australia, National Foods Limited generated sales revenue of AU$1.84 billion, which was 8% above the previous year. Dairy volumes, on the average, were almost flat despite improved cheese sales while juice volumes rose 3% amid aggressive competitor activities. Operating income ended at AU$170 million, 10% more than 2005.

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