Macay on the lookout for M&A opportunities
BEVERAGE manufacturer Macay Holdings, Inc. is scouting for merger and acquisition (M&A) opportunities abroad in the next 12 months in a bid to expand its portfolio outside carbonated drinks.
“Geographically, we’d like to diversify. If there’s an opportunity we can actually invest by way of mergers and acquisitions outside the Philippines, we’d like to be open to that,” Macay President Antonio I. Panajon told reporters after the company’s annual shareholders’ meeting in Makati on Wednesday.
The top executive said they are also looking at partnerships or buyouts of companies in overseas markets, particularly developing countries in Asia and Africa.
“We’d like to look at not only beverage but consider other opportunities that will fit our competence like food. And then product diversification, not being confined to carbonated drinks,” Mr. Panajon said.
Mr. Panajon declined to give details on how much investment they are looking at, but noted this will be “very significant that will really impact our business.”
The interest in diversification comes on the heels of the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law, which significantly pulled down the firm’s earnings in 2018. Its net income attributable to the parent fell 71% to P479.37 million last year.
The company’s products are mostly sugar-sweetened beverages, which were slapped with a P6-12 excise tax under the TRAIN law. Macay brands include RC Cola, Fruit Soda Orange, Juicy Lemon, Arcy’s Rootbeer, and Seetrus.
Macay decided to subsidize the price increase instead of passing it on to consumers, since the lower price is its main advantage against competitors.
“We would like to mitigate like what happened with the TRAIN law, all our businesses are in one basket so that means we’ll have to pursue different strategic directions,” Mr. Panajon said.
Macay expects to record better earnings this year, banking on the recovery in volumes and weather conditions.
“The indications are we’re gaining again our growth in terms of volume…It has something to do as well with the weather. Mainit eh (It is hot)….Profit should be higher than last year,” Mr. Panajon said.
Asked if the company will eventually pass on price increases to consumers, Mr. Panajon said this will be unlikely.
Macay’s net income attributable to the parent plunged 71% to P35 million in the first quarter of 2019, as gross revenues also went down six percent to P2.48 billion.
Shares in Macay shed 1.08% or 10 centavos to close at P9.20 each at the stock exchange on Wednesday. — Arra B. Francia
