Alaska Milk income rises more than 4-fold in 2009

MANILA, Philippines - Net earnings of Alaska Milk Corp., the milk manufacturing concern of the Uytengsu family, rose more than four-fold last year to P1.4 billion, boosted by intensified marketing activities as well as improvements in logistics and supply chain management.

With costs of major raw materials down significantly from their 2008 highs, Alaska’s operating margin improved to 17.9 percent from 4.7 percent a year ago.

Alaska registered sales of P10.59 billion last year, up six percent on sustained growth in sales volume across its core milk business.

“However, opportunity losses in the aftermath of typhoon “Ondoy” impeded sales volume growth during the fourth quarter of the year, especially for the liquid canned milk business. The flooding incident in the Company’s manufacturing facility caused operations to cease temporarily which resulted to some out-of-stocks situations,” Alaska said in its financial report.

The company’s powdered milk business posted strong double-digit growth in sales on the back of improvements in product availability and extensive merchandising efforts in downline retail outlets.

Cost of sales and operating expenses dropped by eight percent to P8.69 billion due to lower raw material prices. Costs of key imported raw materials, skimmed milk powder in particular, as well as local sugar and coconut oil eased down from their peak levels in 2008 due to the decline in global demand attendant to a slowdown in economies.

Operating expenses, however, edged higher due to higher distribution-related charges on increased sales volume as well as sustained advertising and promotional spending to support sales volume growth.

Higher cash balances due to higher profitability and lower working capital requirements brought net interest income to P22.2 million, a reversal from the P55.4-million net interest expense incurred in 2008.

Following a sharp increase in the fourth quarter of 2009, global prices of skimmed milk powder have softened at the start of the year with the onset of milk production in Europe and in the US. – Zinnia Dela Peña