San Miguel unit eyes growth via higher efficiencies

San Miguel Packaging Products (SMPP), after posting a record operating income of P1.9 billion last year, seeks to improve growth this year through its customer focus and continuing drive to become more cost-competitive without sacrificing product quality.

For the first quarter, SMPP posted consolidated sales of P3.8 billion, up 12 percent from a year ago.

SMPP’s glass business has benefited most from operational efforts to reduce fixed costs with its operating income rising by 85 percent from 1999 to P978 million last year. Its year 2000 volume and revenue from domestic glass were up 18 percent and 30 percent respectively.

Overseas, four of SMPP’s five overseas joint venture subsidiaries registered a turnaround, with total revenue of P1.3 billion compared with an operating loss of P11 million in 1999.

Similar gains were achieved from SMPP’s domestic plastics business whose cost-effective raw material sourcing program resulted in substantial savings. These programs, combined with productivity efforts resulting in higher efficiency levels, helped boost operating income from plastics which rose 56 percent to P739 million.

Despite market difficulties, SMPP’s domestic metal business achieved a 10 percent increase in operating income to P475 million, again on the strength of the division’s cost containment programs. SMPP’s metal closures unit last year completed the expansion and modernization of its Mandaue plant with the installation of additional lithography and rust-deterring non-PVC crown lines, and with the opening of a resealable cap line.

Tapping new markets and securing the best prices for its customers will also be among SMPP’s thrusts this year, according to Alberto O. Villa-Abrille, SMPP president.

"We are looking at how we can offer not just a single package but a total packaging solution," Villa-Abrille said. The packaging division of San Miguel Corp., has accelerated it research and development to se able to come up with different formats to meet various packaging requirements ahead of competition, he disclosed.

SMPP’s paper business, with its focus on product development, has already succeeded in attracting customers seeking value-added products and services, enabling the business to expand its market. Last year, this business recorded sales revenue of P1.8 billion, 21 percent higher than 1999. Higher operating efficiencies likewise pushed its operating income up by 18 percent to P160 million.