The recent drought in Australia has hit first-half profits at Philippines conglomerate San Miguel Corp.

San Miguel, which owns Australia’s National Foods, said the drought had pushed up costs from the business, which in turn hit operating profit during the first half of the year.

Group earnings fell to PHP8.2bn (US$179.1m) as profits from the National Foods business fell to A$40.8m (US$34.9m), San Miguel said. National Foods incurred rising costs from importing more juice concentrates amid a tight domestic fruit supply.

San Miguel, south-east Asia’s largest food and beverage company, has recently held tentative talks to sell a stake in National Foods to Japan’s Kirin Brewery Co.

Nevertheless, San Miguel’s sales rose 9% to PHP112.7bn during the first half of 2007, while revenue from the company’s domestic food business increased by 5% due to higher volumes across the unit. Profits from the food business climbed 10%.