SMC core profit up 11% in 2017

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By Krista A. M. Montealegre,
National Correspondent

SAN MIGUEL Corp. (SMC) chalked up a double-digit growth in recurring earnings last year on the back of the strong performance of its traditional businesses coupled with the positive results of its power and oil segments.

In a statement on Thursday, the diversified conglomerate reported its   recurring profit grew by 11% to P54.7 billion last year from P49.4 billion in 2016.

The core income excludes the impact of foreign exchange translation and the one-time gain from the sale of its telecommunications business last year.

San Miguel has been refinancing its dollar-denominated debt to temper foreign exchange losses, as the peso continues to weaken and interest rates go up.

The higher earnings was supported by a 21% improvement in consolidated revenues to P826 billion from P685 billion, as sales across all businesses improved.

San Miguel Brewery, Inc. realized a 17% uptick in net profit to P20.7 billion from P17.7 billion due to favorable economic conditions and strong marketing and integrated sales initiatives. Revenues rose 17% to P113.3 billion from P97.2 billion, following a 13% growth in volumes to 260 million cases.

Ginebra San Miguel, Inc. sustained its recovery for the fourth straight year, with net income rising 67% to P602 million from P361 million. Revenues reached P20.9 billion, up 12% from 2016, as sales volume increased by a tenth to 27.7 million cases, driven by double-digit growth of flagship brand Ginebra San Miguel and Vino Kulafu.

Favorable selling prices, a better sales mix, and lower costs for some major raw materials pushed the earnings of San Miguel Pure Foods Co., Inc. by 16% to P6.9 billion from P6 billion in the previous year.

San Miguel Yamamura Packaging Group rode on the continued growth in its Australian operations and higher sales from its glass, metal and plastics businesses to boost revenues by 17% to P32.1 billion from P27.4 billion.

SMC Global Power Holdings Corp. saw its net income “significantly increase” to P8.2 billion on the back of lower unrealized forex losses and a 6% growth in revenues.

Petron Corp. enjoyed a 30% expansion in net profit to P14.1 billion from P10.8 billion as a result of its focus on high-value segments and robust sales volumes from both domestic and Malaysian operations.

Meanwhile, SMC said its board of directors on Thursday approved the company’s subscription to the $650 million in redeemable perpetual securities to be issued by its subsidiary SMC Global Power.

The diversified conglomerate told the stock exchange the amount will be used by SMC Global Power “to partially finance the acquisition of the Masinloc power assets.”

The issuance follows the approval on Feb. 23 by the Philippine Competition Commission of SMC Global Power’s acquisition of the equity shareholders of the 630-megawatt (MW) Masinloc coal-fired power plant in Zambales.

In December last year, SMC Global Power reached a share purchase agreement with the two equity holders of the power plant’s owner, Masin-AES Pte. Ltd., in a deal worth $1.9 billion.

Shares in SMC lost 70 centavos or 0.5% to close at P140.50 apiece on Thursday. —with Victor V. Saulon