|
Following a good year of change and consolidation in
2007, this year is going to be a very good one for San Miguel Corp.
(SMC), the Philippines’ and Southeast Asia’s largest food and
beverage company.
In 2007, according to the
Philippine Stock Exchange, SMC became the third largest public
company, with revenues of P163.7 billion, behind Petron Corp. with
P211.77 billion and Meralco with P204.28 billion. SMC, however,
states its 2007 revenues at P154.88 billion, up 10 percent from its
2006 sales of P140.59 billion. Net income amounted to P8.35 billion,
up 15 percent from P9.98 billion in 2006. This year, says Ferdinand
K. Constantino, SMC treasurer, “is going to be the best year for
the company in five years.”
”All the businesses are doing
very well,” the company’s third highest ranking official
enthuses. The estimated January to June beer sales, according to
analysts, are running 7 percent ahead of last year’s. The other
operating divisions also had robust sales—foods, packaging,
beverages. Packaging is up 7 percent. In the first five months of
2008, SMC already posted profits of P17 billion, largely from gains
from sale of assets and also profits from operations. In the first
quarter of 2008, San Miguel Brewery, Inc. sustained its upbeat
performance following a strong volume recovery in 2007. Net sales
amounted to P6.33 billion.
SMC has proved itself quick and
nimble in reacting to market changes and increasing competition.
With higher oil and food prices, battered consumers have shifted to
lower priced products in smaller packages. San Miguel Pure Foods
began offering meals in sachets.
The company has made a number of
new product introductions—including branded snack foods, putting
it in direct competition with John Gokongwei’s Universal Robina
and Carlos Chan’s Oishi; new beverages like tea and flavored
bottled drinks, putting it in toe to toe rivalry with again,
Gokongwei’s C2 and Alfred Yao’s Zesto. SMC has repositioned
brandy line, Gran Matador, to challenge the dominance of Andrew
Tan’s Emperador.
On a strategic scale, SanMig has
disposed of nearly all its Australian assets—National Foods, Berri,
J. Boag, and Lactos. The firesale was triggered mainly by a
prolonged drought in Australia, lasting for ten years, that
devastated that country’s wheat harvests and resulted in the
ouster of its prime minister, and in a sluggish economy.
SMC’s Australian operations are
reflected in the company’s financial statement under “Income
after tax from discontinued operations.” In 2005, net income from
“discontinued operations” amounted to a whopping P4.428 billion.
In 2006, income went down 61 percent to P1.727 billion despite a 19
percent surge in revenues to P108.9 billion from P91.36 billion. In
2007, profits were almost nil— P145 million on revenues of P87
billion.
”We have done so much in the
last few years to transform your company in a number of significant
and important ways,” says Chairman and CEO Educardo Cojuangco Jr.
San Miguel is, today, fundamentally different from what it was a
decade ago. In 2007, SMC initiatives were accelerated—the sale of
Coca-Cola Bottlers Philippines, Inc., Del Monte Pacific, Ltd.,
National Foods and J. Boag and Son; the spin-offs of both its
packaging and beer divisions. “All these actions constitute a
transformation of who we are as a company and how we will operate in
the future,” says President Ramon S. Ang. These changes have been
made in response to what Cojuangco and Ang believe are new
marketplace opportunities that promise to bring more value to the
company.
While 2007 was a challenging
year, SMC continued to execute business plans effectively, producing
gains in key businesses, increasing revenue and growing its core
segments, particularly its beer business. The results from core
operations saw revenue of P155 billion, an increase of 10 percent,
with profits from continuing operations of P8.21 billion ending
slightly higher over 2006 levels.
While the beer business did very
well, liquor and packaging businesses had to contend with adverse
business conditions, primarily higher excise taxes in the case of
Ginebra San Miguel, Inc., and a decline in the demand for glass
containers. Lower-than expected profits from these units weighed
down operating income by 8 percent to P12.0 billion and net income
by 16 percent to P8.63 billion.
Cojuangco and Ang believe 2007
was a solid year for the San Miguel Group. “We’ve coped well
with the head-wind from competitors, rising costs and tough
conditions in some markets,” they assert. They add: “We’ve
come through in good shape and we’ve done it by pushing sales and
improving distribution, and at the same time investing for future
growth. We exited 2007 a far more resilient and responsive business.
Our balance sheet is much stronger, which will allow us to seize
opportunities for more sustainable growth and profits.”
biznesasia@gmail.com
|
