SMC signs $20-M deal with Thai company

Food and beverage conglomerate San Miguel Corp. has signed an agreement with Thai real estate developer Amata City Co. Ltd. for the purchase of a $20-million industrial complex in Amata City, Rayong.

Signatories to the agreement were SMC chairman Eduardo Cojuangco, SMC president Ramon S. Ang, Amata chairman Chavalit Yodmani and chief executive officer Vikrom Kromadit. Witnessing the signing of the agreement was Thailand Prime Minister Thaksin Shinawatra.

The purchase of the 100-hectare industrial site in Rayong, one of the most vibrant industrial estates in Thailand, is part of SMC’s move to fortify its presence in the Asia-Pacific region. Thailand is one of the seven countries earlier identified by SMC as an ideal expansion site.

SMC’s expansion in Thailand involves the manufacturing of various products from beverage, processed food to feeds. The plant is expected to be operational in 2005.

SMC views Thailand as a strategic investment site due to its huge beverage market, competitive investment and tax incentives, well-developed infrastructure and proximity to other target markets like Cambodia, Laos and Myanmar.

Aside from Thailand, SMC is also looking at China, Vietnam, Indonesia, Australia, Malaysia and Taiwan for its regional expansion. SMC signs. It will sign agreements soon to establish food and beverage complexes in these areas.

SMC’s annual group revenue should be boosted by $300 million from sales generated in these markets.

SMC has earmarked up to $700 million for planned acquisitions and investments in Asia aimed at seeking offshore growth to complement its dominant foothold in the local beverage market.

At present, SMC is in talks with Malaysian conglomerate Lion Corp. for the acquisition of the latter’s breweries in mainland China. It is also making a pitch for Vietnam-based Coca-Cola Indochine Pte. Ltd.

The Lion Group has 11 joint brewery plants in China with a total production capacity of 1.6 million tonnes per annum.

To support its bid to become a major regional player, SMC is eyeing to buy out or at least own a controlling interest in Coca-Cola Indochiine, which has a 65-percent market share of the Vietnamese softdrink market.

SMC plans to make major inroads in the Asia-Pacific region to further improve its profitability and enhance shareholder value. It is hoping its increased presence in these Asian markets will allow it to keep posting double-digit sales growth even as economic activity in the Philippines remains sluggish.

Cojuangco earlier said that SMC was likely to meet its P7 billion net profit target for 2003, up from P6.63 billion in 2002, when the company booked a restructuring cost of P837 million.

SMC’s net profit for the three months to June fell 10 percent from a year earlier to P1.709 billion as the Severe Acute

Respiratory Syndrome (SARS) outbreak limited beer sales in Hong Kong and China. First half to June net profit rose two percent to P3.05 billion, with net sales growing nine percent to P72.16 billion.