USA: Further San Miguel Corporation (SMC) growth seen via recent acquisitons
Consolidated sales increased 35% to P57.3 billion ($1 billion(a)) following sales revenue gains of 18% in the food business, 6% in beverage, and 5% in packaging. Sales contributions of newly acquired Pure Foods Corp. and Coca-Cola Bottlers Philippines Inc. (CCBPI) were already felt starting in this year's second quarter with CCBPI turning in P6.7 billion for May and June, and Pure Foods accounting for P3.9 billion ($78 million) in sales for the full second quarter.
Operating income for the first half reached P5.2 billion ($104 million), up 29% from P4.0 billion a year ago. Boosted by the continued favorable results from all of the Company's businesses, SMC posted consolidated net income of P3.8 billion ($76 million) in the first half of the year, up 10% from the P3.4 billion posted last year. Pure Foods registered a P190 million ($4 million) net income while CCBPI had P231 million ($5 million).
Synergies drawn from the full integration of all of San Miguel's operations are expected to become more evident in the coming months as the Company further rationalizes its marketing and distribution systems. To bring customer service to a higher and customized level, SMC has, for instance, created a Corporate Key Accounts Group (CKAG), an integration of the key accounts units of San Miguel Beer Division, La Tondena Distillers, Inc. and Philippine Dairy Products Corporation.
In the food business, San Miguel Food Group (SMFG) and Pure Foods are already harnessing each other's strengths in processed meats and poultry feeds, which would eventually lead to an integrated approach in market positioning, sharing of facilities, technical know-how and distribution networks. With these combined food operations, SMC now accounts for 74% of the hotdog market, 24% of canned meats, 40% of poultry, 32% of feeds and 17% of flour milling.
Excluding Pure Foods and the coconut oil business, SMFG posted first half revenues of P9.5 billion ($190 million), 18% above last year's P8.1 billion on aggregate volume increase of 6%. Operating income for the first half totaled P309 million ($6 million), 219% better than last year's P97 million.
Separately, Pure Foods' sales for the second quarter rose 24% to P3.9 billion ($78 million) while net income increased 11% to P190 million ($4 million). CCBPI, on the other hand, had an operating income and net income for the second quarter of P322 million ($6 million) and P231 million ($5 million), up 47% and 85% against last year, respectively.
In SMC's international beer business, an operating income of US$282,000 was posted in the first half, representing a 238% turnaround from an operating loss of US$204,000 last year. Sales volumes, excluding Australian brewer J. Boag & Son, hit 16.85 million cases in the first half. Strong volumes were achieved in North China with an 18% improvement, and in Indonesia which grew by 10%. Total revenues of US$109 million was 3% above last year's US$106 million. South China posted a 37% improvement in operating income due to a product mix favoring the higher margin Pale Pilsen in steinie bottles.
Meanwhile, J. Boag continued its strong performance with 1.6 million cases of sales volume and brewery operating income contribution of US$1.6 million.
SMC's Philippine beer operations posted operating income of P2.53 billion ($51 million), slightly higher than last year's P2.50 billion. Fixed costs were tightly managed and accounts receivables reduced by P1.7 billion ($34 million) or 23%, from P7.7 billion as of June 30, 2000 to P6.0 billion ($120 million) as of June 30, 2001.
La Tondena Distillers Inc.'s consolidated sales revenues for the first half amounted to P7.8 billion ($156 million), up 12% from last year's P7.0 billion. The growth came from the water and juice businesses and the consolidation of Sugarland, which registered sales of P1.6 billion ($32 million). Operating income amounted to P1.52 billion ($30 million) with liquor accounting for 84% of the total.
San Miguel Packaging Products (SMPP) registered sales revenue of P7.4 billion ($148 million) for the first half, up 5% from last year's P7.1 billion. Improvements came mainly from paper and two-piece cans. Operating income in the first half amounted to P849 million ($17 million).
Founded in 1890, San Miguel is the largest food and beverage company listed in S.E. Asia and is active within the brewing and beverages, food and food-related, and packaging areas. San Miguel's ordinary shares trade on the Philippine Stock Exchange and trade in ADR form in the US (each equal to ten SMC Class B common shares). Prices for the ADRs may be accessed on the NASD OTC Bulletin Board under the symbol SMGBY. Quotes for San Miguel ordinary shares may be accessed on Bloomberg under the symbol SMC/B PM and on the Reuter Equities 2000 Service under the symbol SMC.
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(a) Income statement figures have been converted for reader convenience at the exchange rate US$1 = P50.00
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