SMC packaging business posts gains

San Miguel Packaging Products (SMPP) weathered a slow moving market and a sluggish regional economy last year with its operating income advancing by 22 percent to P1 billion as a result of improved efficiencies and cost management efforts.

Volume gains were achieved for the glass, plastic crates and pallets, composite and paper packaging businesses, an upward trend that continued last January which saw SMPP's total volume rising by five percent. Total revenues were up by one percent last year. To widen its market and revenue base, SMPP pushed new product development, introducing a range of new products and packaging formats designed for greater ease of handling.

Major efforts to increase glass volume resulted in a five-percent growth which largely offset a decline in prices. Higher production efficiencies and a reduction in working capital resulted in a 40-percent increase in operating income to P530 million.

Likewise, operating income for the metals business grew by 27 percent despite a five-percent decline in volume and a two-percent drop in revenue as SMPP succeeded in reducing fixed costs and improving productivity.

Volumes for plastic crates and pallets remained strong resulting in a 12-percent volume increase for SMPP's plastics business. Higher volumes together with better raw material sourcing allowed the plastics business to post an operating income of P473 million, 37 percent higher than 1998.

Spurred by a recovery in the food processing industry, volumes of SMPP's composite packaging business grew 40 percent in 1999, while revenue increased by 21 percent to P1.1 billion from P0.91 billion. The composite business posted a 60-percent increase in operating income to P233.9 million from P146 million in 1998.

SMPP's paper business experienced a turnaround as sales volume and revenue grew by 23 percent and 17 percent, respectively. Increased efficiencies and initiatives to further improve cost competitiveness resulted in a 394-percent growth in operating income to P135 million from P27 million. To further boost sales, the paper business introduced branded value-added products such as the EZTear corrugated cardboard; Hardibox, a polyester-reinforced carton; and RipTop easy-to-open cartons.