SAN MIGUEL Corp. (SMC) reported an 18% drop in net income attributable to equity holders of the parent company in 2018, as an increase in revenues failed to offset higher expenses.

In a regulatory filing on Monday, the diversified conglomerate said its net income attributable to equity holders of the parent company stood at P23.077 billion last year, from P28.225 billion in 2017.

Revenues reached P1.025 trillion last year, 24% higher from P826.086 billion the previous year, due to “higher volumes and favorable selling prices across all major businesses.”

However, SMC noted the cost of sales spiked 28% to P825.748 billion as the increase in crude prices and excise taxes, as well as operations of new facilities weighed on the bottom line.

“Cost of sales increased…mainly due to the increase in crude prices and effect of excise tax of Petron Corp. (Petron); higher sales volume of San Miguel Brewery Inc. (SMB) and the Food Segment; increase in excise tax by 4% per case of the domestic operations of SMB and operations of the newly acquired Masinloc Power Partners Co. Ltd. (MPPCL or the Masinloc Group) and the new Greenfield power plants in Bataan and Davao,” the conglomerate said.

On top of operating expenses, SMC also recorded 22.8% rise in financing charges at P38.304 billion due to “higher level of loans payable and long-term debt in 2018 compared to 2017.”

SMC also saw an increase in other charges to P5.6 billion “primarily due to the higher foreign exchange loss on the translation of the foreign currency denominated long-term debt and finance lease liabilities, partly offset by the higher gain on the translation of foreign currency denominated cash and cash equivalents with the peso depreciating by P2.65 from P49.93 in December 2017 to P52.58 in December 2018.”

Last month, SMC disclosed its consolidated recurring net income stood at P55.18 billion, up one percent, in 2018.

“Income growth for the conglomerate was tempered by the sharp decline in crude prices resulting in inventory losses for its fuels and petrochemical business during the 4th quarter of 2018. This was compounded by forex translation losses for the year,” the conglomerate said in a statement at that time.

Shares in San Miguel fell 4.24% or P7.70 to close at P173.70 each on Monday. — Denise A. Valdez