San Miguel Pure Foods to raise capital to P146M

San Miguel Pure Foods Inc. is raising its authorized capital stock to P146 million, from P84 million, to faciliate the issuance of shares to parent firm San Miguel Corp.

In a disclosure to the Philippine Stock Exchange, Purefoods said it will issue an additional 47.48 million class A shares and 23.39 million class B shares to San Miguel in exchange for the latter’s shareholdings in food units Monterey, Magnolia and San Miguel Foods Inc.

Purefoods said it was amending article seven of its articles of incorporation to provide for the waiver of pre-emptive rights on the issuance of additional shares to San Miguel and the increase in capital stock.

The proposed capital hike is subject to the approval of Purefoods’ shareholders at a special stockholders meeting to be held on Jan. 31, 2007.

Stockholders of record as of Dec. 29 will be entitled to vote at the said meeting.

Purefoods expects sales from new products including the Eaji snack foods, three-in-one coffee mix, ice cream, cooking oil and pancake mix, to hit P2 billion this year.

Poultry, however, remains the company’s major revenue contributor given the growing domestic and regional demand for domestic chicken meat.

Purefoods has set aside P2 billion this year for the continued expansion of its business to augment revenues and enhance shareholder value.

The company will soon offer instant noodles to add to its stable of products which include processed meat.

Aside from investments in new businesses, the capital budget will be used for the continued improvement of the company’s ice cream operations, under the brand name Magnolia, which was relaunched in 2004 after a five-year hiatus.

The Magnolia brand is by far the dominant player in the margarine segment, where the brand is claimed to have cornered 90 percent of the market for non-refrigerated margarines and 80 percent of the market for refrigerated margarines.

Purefoods continues to improve efficiencies in its agro-industrial businesses by implementing new and advanced technologies that will expand its feeds and broiler farm capabilities.

Overall, the packaged food industry is set to benefit from increasing disposable incomes, on the back of higher economic growth. Principal markets would continue to be the middle and upper consumer groups accounting for 15-20 percent of the population.

As lifestyle changes, demand for convenience proliferates among more working women with fast-paced lifestyles leading to increasing demand for packaged foods.