E-Malt.com News article: Philippines: San Miguel Corp., posted net income grew 2.3 % in Q1 2005

Philippine San Miguel Corp., posted on May 17 that its net income grew just 2.3 % in the first quarter of the year. The company reported a net income of 1.78 billion pesos ($33 million) in the first quarter, compared with 1.74 billion pesos in the same period of 2004.

Revenues grew 21 % to 47.2 billion pesos in the first quarter, while operating income rose 16 percent to 3.84 billion pesos. San Miguel said it expected capital spending of 15 billion pesos this year. Domestic beer sales volume grew about 2 % in the first quarter, the sources said, due to stocking up by retailers before a price hike on Feb. 1 that averaged around 13 percent.

"It's in line with our expectations of flattish profit growth this year," said Leo Venezuela, analyst at ATR Kim Eng Securities Inc. "Taken as a whole, most of the acquisitions last year would have some positive effect on San Miguel, but on a stand-alone basis, they are very small compared to the existing businesses."

Some analysts had expected San Miguel's profits to have slid without the election-related spending boost in the same period of last year, Reuters commented. "Many challenges prevail in our current operating environment, not least the impact of higher raw material, fuel and transport costs and higher excise taxes," Chairman and Chief Executive Officer Eduardo Cojuangco told shareholders. Cojuangco said higher financing charges from a run of international acquisitions had also slowed profitability.

Last year, San Miguel, owned 20 % by Japan's Kirin Brewery Co. Ltd., bought brewery, drinks, hog farm, coffee, ice cream and juice assets in Thailand, Vietnam, Singapore and Australia. In April, it won a takeover battle for Australia's National Foods Ltd. by bidding $1.46 billion.

San Miguel is expected to report profit of 8.91 billion pesos this year, up 10 percent from the 8.08 billion pesos in 2004, based on estimates from eight analysts polled by Reuters Estimates. But the average 2005 profit forecast was lowered recently from 9.3 billion pesos that was projected by the analysts in February.

Liquor prices at San Miguel's unit Ginebra San Miguel Inc. (GSMI.PS: Quote, Profile, Research) rose an average of about 15 percent in January. The price hikes were meant to compensate for rising costs of inputs and a higher tax rate imposed on alcohol and tobacco products in the Philippines at the start of the year.

"Whatever growth in (beer) volume they had in January was not reflected in succeeding months," said Alex Pomento, research head at Macquarie Securities (Philippines) Inc.

Analysts said San Miguel -- whose operations account for 3.4 percent of Philippine gross domestic product and contribute 5.6 percent of state tax revenues -- would start to benefit this year from its international expansion binge. "If we remain in the Philippines, the most that we can expect is 2 percent growth," Cojuangco said.

San Miguel's B-shares, open to foreign investors, rose 8.7 percent in the first quarter but its A-shares, restricted to Filipinos, fell 5.1 percent. The main stock index gained 7.2 percent over the same three-month period. On Tuesday, the A-shares closed unchanged at 58 pesos and the B-shares climbed 1.18 percent to 86 pesos, before the results were confirmed, as the main index rose 0.75 percent. ($1 = 54 pesos)


18 May, 2005