Ginebra San Miguel expected to sustain double digit growth in Q1

Despite the loss of several product lines, San Miguel Corp.’s liquor unit Ginebra San Miguel Inc. (formerly La Tondeña Distillers Inc.) is expected to sustain a double-digit growth in its bottom line for the first three months of 2003.

Industry sources said with the robust volume sales and effective cost management, GSM’s net profit could hit over P450 million in the first quarter, about 10 percent more than in the previous year.

In the first two months of the year, GSM’s earnings have already reached P322 million.

Following up on its parent company’s better-than-expected beer sales volume during the first quarter, GSM is expected to post a stronger volume growth of over 20 percent during the period, the same sources added.

During the first two months of the year alone, GSM’s sales volumes have reached 5.4 million cases, or 26 percent higher than a year ago.

By March, volumes have similarly grown at double-digit rates with Vino Kulafu and GSM Blue as the core brands driving sales in Southern Philippines.

With robust consumer demand driving up sales, the sources said GSM’s revenues for the quarter are likely to exceed P3 billion, representing double-digit growth compared to the same period last year.

Last February, the company announced that it signed an agreement to sell the remaining Jelly Ace business to an affiliate, Magnolia Inc. of the San Miguel Food Group.

GSM will receive around P500 million (P1.60 per share equivalent) in cash once the transaction is completed, the proceeds of which will be used to actively pursue new growth opportunities locally and abroad.

Early this month, GSM assumed its new corporate name in a move that would distinctly reinforce its focus on its flagship product brand, the Ginebra San Miguel gin.

With the Ginebra San Miguel brand – acknowledged as the largest selling gin brand in the world– GSM remains as the country’s largest liquor firm. Its other products are GSM Blue, Vino Kulafu, Añejo Rum, Tondeña Manila Rum, Cordial Lime Mixer and the newly-launched Erg.

In line with SMC’s groupwide integration and restructuring starting in 2001 with the acquisitions of three major businesses – Coca Cola Botters Philippines Inc.(CCBPI), Cosmos Botlling Corp. and Pure Foods Corp. – GSM merged its acquired units Sugarland Corp., Metro Bottled Water Corp. and SMC Juice Inc. into a single entity and divested them for $141 million (P7.334 billion) to fold into the Coca-Cola-led group.

Although its water and juice segments contribute 27 percent to total revenues, the company remains firmly anchored on its hard liquor line which is its solid growth driver making up 73 percent of total sales.

The transfer of Sugarland, which leads the fast-growing ready-to-eat jelly snacks and dessert segment, completes the last phase of GSM’s restructuring into a fully liquor-based company, although it gave up some of the biggest name brands such as the Magnolia brands of fruit drinks, Zip Juice Drink, Eight O’Clock, Ponkana, Ice Cold Mixers and the bottled water brands Viva!, FIRST and Wilkins.