SMC’s Purefoods sets P6-B expansion binge this year

San Miguel Purefoods Co. Inc. has set aside P6 billion this year for the construction of an ice cream plant and the improvement of existing facilities as it hopes to further strengthen its foothold in the local food industry.

At the sidelines of the company’s stockholders meeting yesterday, Purefoods president Francisco Alejo III said the company will continue to expand existing businesses that now include a diversified dairy operation, coffee, pet food, condiments, cooking oil and snack foods.

"We will improve new plants to raise capacity and better serve the consuming public," Alejo said.

He said the ice cream plant, estimated to cost between P300 million to P400 million, is expected to be completed next year. The plant is located in Sta. Rosa, Laguna.

Funding for its expansion program will come from a combination of internally-generated cash and previously earmarked financing facility.

Alejo said Purefoods may also acquire other businesses which they feel could significantly contribute to the company’s coffers.

"We will look at different formats available in the market where we’ll have a good chance. If there are available good acquisitions then we will pursue it. We continue to look at what consumers prefer," he said.

"Once heavily dependent on commodities, Purefoods now oversees a rapidly growing processed and value-added, branded meats and dairy segment that, in the medium-term, will likely contribute more than half of total food sector revenues, making us far more competitive and in the future, less vulnerable to the vagaries of commodity markets," Alejo said.

Purefoods has lined up new products for the year to boost its profitability. The company launched 166 new products in 2004 alone, up from 80-plus the prior year.

Purefoods Hormel’s line-up of 43 new products contributed an additional P34.27 million in sales turnover for the year.

Great Food Solutions, the food arm that serves institutional clients, reported an 84 percent increase in sales from the previous year on the strength of new and convenient products. It has just won a five-year exclusivity contract with the 7-Eleven chain of convenience stores.

Purefoods chief financial officer Emmanuel Erana said the company is expected to return in the black in April due to the recovery of its poultry business.

The company recently opened a modern meat processing plant and two flour facilities which, once in full swing, will redound to greater efficiencies in terms of production and manufacturing.

Purefoods incurred a net loss of P40 million in the first quarter of the year on higher operating expenses and costs. This despite higher revenues which grew 25 percent to P11.6 billion.