San Miguel sales surge in July, August

With the containment of the SARS epidemic, Southeast Asia’s largest food and beverage conglomerate San Miguel Corp. (SMC) posted strong gains during the first eight months of the year, with domestic beer operations maintaining robust volumes.

In a statement issued yesterday, SMC said its consolidated sales revenue from January to August this year grew by 11 percent to P96.8 billion, buoyed by sustained favorable performance across most of its businesses. Consolidated operating income reached P7.47 billion.

In the first semester, SMC’s net income rose by only two percent to P3.05 billion as net sales went up by a moderate nine percent to P72.16 billion. The outbreak of SARS (Severe Acute Respiratory Syndrome) during the period has been largely credited for the slowdown in sales particularly in SMC’s international markets in Asia as consumers stayed away from public places and cut down on their purchases.

Consolidated sales revenue of the Coca-Cola Beverage Group for the first eight months hit P25.9 billion or 15 percent higher than last year. Coke’s volume for the period was slightly above last year while Cosmos’ sales volume continued to show a strong recovery as it improved by 25 percent.

Water volumes rose 17 percent in the first eight months while juice recorded an 11-percent improvement.

A sustained turnaround was registered during the past two months for the San Miguel Food Group with its operating income reaching P586 million. Showing volume gains for poultry and processed meats, the Food Group’s eight-month revenues amounted to P26 billion.

SMC said a turnaround was likewise achieved in its international beer business which showed strong results in July and August. Sales volume during those months was 12 percent higher than the same period last year as Hong Kong and South China recovered from the slump caused by the outbreak of SARS .

"With the SARS problem now in check, recovery is expected to continue in the coming months," SMC said.

SMC expects to hit its 2003 net profit target of about P7 billion or 5.6 percent higher than the company’s year-ago net income of P6.63 billion.

Analysts, however, are expecting SMC’s net income to reach between P7.5 to P7.9 billion by yearend unless the local economic and political environment worsened.

With the strong operating results for the first eight months of the year, SMC expects to sustain its growth momentum approaching the peak season in the last quarter and remains focused on meeting its full year’s targets.

SMC earlier inked a $20-million agreement with Thai real estate developer Amata City Co. Ltd. for the purchase of an industrial complex in Amata City, Rayong, one of the most vibrant industrial estates in Thailand.

The purchase of the 100-hectare industrial site 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. 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.