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San Miguel Corp, Southeast Asia's largest food and beverage conglomerate, said on September 3 it expects to hit its 2003 net profit target of about seven billion pesos ($127.7 million). That would represent growth of about 5.6 % over the company's 2002 net income of 6.63 billion pesos but would fall short of analysts' forecasts. Analysts on average expect around 7.9 billion pesos in net income this year, according to Reuters Research, a unit of Reuters Group Plc.

Chairman and Chief Executive Officer Eduardo Cojuangco told reporters that San Miguel would soon acquire properties in Thailand, Vietnam and Indonesia. "I think we will be able to reach our projections - a little over seven billion pesos net income," Cojuangco said when asked about prospects for San Miguel's earnings this year.

San Miguel, 15 % owned by Japan's number two brewer Kirin Brewery Co Ltd, had net income of 3.05 billion pesos in the first half, up just 2% from a year earlier due to a 10 % drop in second-quarter profit. Alex Pomento, research head at CLSA Securities, said given the "unstable economic environment" so far in the third quarter, San Miguel's second-half profit target of about four billion pesos was "still commendable". But he said he would not change his net profit forecast of 7.8 billion pesos for this year unless the local economic and political environment worsened.

The peso fell dangerously close to its record low of 55.75 to the dollar last week due to political worries after the July 27 mutiny by rogue soldiers, graft accusations by a senator against President Gloria Macapagal Arroyo's husband and a court ruling suspending the central bank governor over the closure of a medium-sized bank.

The company, which dominates the beer, sector of the Philippine market, imports malt and barley for brewing beer. Cojuangco also expressed concern about a recent ruling by the Bureau of Internal Revenue classifying one of the group's beers, San Mig Light, as belonging to a higher excise tax bracket. "Sales will be affected because we will pass it on to our consumers," he said. "If the consumer cannot afford it, they will drink less. We cannot absorb all the increase in taxes, so it's a worry.

San Miguel previously said it wanted to expand in seven Asian countries this year to propel growth as it faces saturation in the local market
Cojuangco said ultimately, San Miguel will invest about $100 million in each of the seven countries it has targeted --China, Indonesia, Vietnam, Cambodia, Malaysia, Taiwan and Australia.

The company now operates breweries in Vietnam, Indonesia and China, as well as a brewery in Australia. San Miguel is also eyeing acquisitions in the region. It has confirmed it was in talks with Malaysia's diversified Lion Corp, which has breweries in China.


04 September, 2003