SMB sees double-digit income growth

MANILA, Philippines - San Miguel Brewery Corp. (SMB) is looking at a double-digit growth in net income this year as it further strengthens its operating and manufacturing platform through the addition of new bottling facilities and new product offerings.

On the sidelines of the company’s annual shareholders meeting yesterday, SMB chairman Ramon S. Ang said the changes implemented by the company to drive operational efficiencies and reduce costs would boost the flagship domestic brewery firm’s bottom line results.

“We are 100 percent confident that 2010 will be another record-breaking year for SMB. Guided by our company slogan “Drink to Life,” we will embrace change and challenges so we can bring our company to even greater levels of success. Inspired by another rewarding year, SMB will continue to reach more beer lovers and create value for our shareholders to further our company’s growth and continue to become a major player in the beverage industry,” he said.

Ang said the company is putting up a new bottling plant in Sta. Rosa, Laguna which will provide 22 million cases per year upon completion early next year. Plans are also underway to build additional facilities in Bicol, Cagayan de Oro, and Ilocos to meet the anticipated strong demand for beer in the next five years. These would be in addition to the five existing bottling facilities in Valenzuela, Davao, Cebu, Pampanga and Bacolod.

Ang said the company’s brewing facilities have a combined capacity of 17 million hectoliters per year. 

With a commanding market share of 96 percent, SMB intends to solidify its popularity through the introduction of new products to prop up the market and tap new segments, Ang said, as he pointed out that San Miguel Beer remains as the most preferred brand by consumers.

“With our growing volumes and efforts to expand the market, nine out of 10 Filipino beer drinkers consume San Miguel Beer brands. The demand for our products has been so great that in the next few months, we will be breaking ground for our satellite bottling plant in Sta. Rosa, Laguna. This new facility will support our volume expansion programs,” Ang said.

“This year, we will concentrate on programs to increase beer consumption and the visibility of our brands. These we will pursue through enhanced trade promotions, occasion-creating activities, merchandising initiatives and moderate pricing strategy, among others,” he added.

Ang said the company may tap the debt market to fund its purchase of a 49 percent stake in hard liquor firm Ginebra San Miguel Inc. from parent firm San Miguel Corp. The sale is seen to be consummated within the year as part of San Miguel’s divestment program aimed at fuelling its diversification into the more profitable infrastructure and heavy industries.

Ang said SMB would make a tender offer for the remaining shares held by Ginebra minority shareholders in order to comply with the Securities Regulation Code.

A tender offer is triggered if a company buys more than 35 percent stake in a listed company, requiring it to make an offer for the remaining shares of the target firm.

Ginebra swung to profitability last year, chalking in a net income of P701 million as against a net loss of P279 million in 2008. Sales rose 27 percent to P19.5 billion, mainly driven by strong demand for the company’s GSM Blue and Gran Matador products

San Miguel earlier said it planned to raise $1 billion from the sale of assets, which include stakes in its packaging ventures and in canned meat and hotdog maker San Miguel Purefoods.  

The  conglomerate, which has generated about $3 billion from asset sales since 2008, intends to continue its diversification into infrastructure development, power, telecommunications and mining.

San Miguel has already bought stakes in power distributor Manila Electric Co., Liberty Telecommunications Holdings Inc., a couple of power plants and coal-mining companies, a tollroad project, and an option to acquire a controlling stake in oil giant Petron Corp.  It has also been offered stakes in other infrastructure projects including tollroads and airport.  

The company is likewise on the lookout for large oil, coal, natural gas and mining acquisitions abroad to further spur growth.