SMC profit in H1 up only 2% due to SARS

Food and beverage giant San Miguel Corp. reported a slight two percent increase in its first half income this year to P3.05 billion due to lower sales volumes in Hong Kong and China as a result of the SARS (Severe Acute Respiratory Syndrome) epidemic.

"The company’s profit performance was tempered as significant earnings dilution occurred due to the impact of SARS on beer volumes in Hong Kong and South China and the protracted weakness of industry poultry prices," SMC said in a statement.

SMC said its net sales revenue grew by nine percent to P72.16 billion with domestic beer sales rising by 11 percent.

The packaging business also sustained its growth momentum as it posted an increase of 18 percent in six-month sales this year.

SMC said the improved profitability was due to lower interest expense, a result of the substantial reduction in debt levels.

Year-to-date operating income reached P6.15 billion, slightly higher than the previous level of P6.08 billion.

With the containment of the SARS epidemic, SMC expects the international beer market condition to improve considerably in the second half of the year.

As for poultry, an industry-wide supply adjustment has already resulted in improvements in selling prices, SMC said.

Ginebra San Miguel Inc., the hard liquor subsidiary of SMC, posted a net income of P925 million in the first half this year, up by 14 percent from the year ago level. Revenues also increased by nine percent to P5.97 billion.

The increase was driven by stronger sales volume and continued enhancements in operational efficiencies.

SMC said it will continue to fine-tune its domestic and existing international operations to achieve enhanced profitability.

Recently, the company said it is embarking on a P6.7-billion major recycling plant project, a first in the Asian region. The project will utilize state-of-the-art technology approved by the US and European Food and Drug Administration to process post-consumer plastic bottles and convert these into food-grade packaging materials and containers.

San Miguel Yamamura Asia Corp. (SMY), a joint venture with Japan’s Nihon Yamamura Glass Co. Ltd., is spending as much as P1.1 billion for the expansion and rehabilitation of its bottling forming facility in Imus, Cavite.

This will increase the plant’s existing capacity from 180 metric tons per day to 215 metric tons per day. SMY has allotted P400 million for this undertaking. SMY produces glass containers for the food, beverage, personal and health care industries.