San Miguel’s beer unit posts 62% profit drop

SAN MIGUEL CORP. (SMC) is expecting its beer business to start recovering in the second half, after being battered with a 62.3% earnings drop in the first six months by restrictions on alcoholic beverages.

In a statement Tuesday, SMC said its beer unit San Miguel Brewery, Inc. (SMB) recorded a net income of P5 billion for the six months to June.

The conglomerate did not release a comparative figure for last year’s first semester, but it previously reported a P13.258-billion income for the unit, which translates into a 62.3% year-on-year decline.

Its revenues stood at P42.8 billion, lower by 39% from last year’s P70.28 billion, pulling operating income down 61% to P7.4 billion.

The declines were attributed to the lockdown starting in mid-March to contain the coronavirus outbreak. This resulted in liquor bans and the closure of beer selling outlets for more than two months. The higher excise tax on beer products was also identified as a factor.

But SMC said both SMB and its spirits unit Ginebra San Miguel, Inc. (GSM) saw “significant” improvements in demand at the end of the second quarter, when the liquor ban was lifted despite the continuing lockdown.

“Demand for our beer and liquor products remain strong, and if June and July are any indication, we’re seeing signs of a strong recovery in the second half of the year,” SMC President and Chief Operating Officer Ramon S. Ang said in the statement.

He added SMB and GSM are managing costs and tightening business controls to keep posting profits and protecting margins. Part of the strategy is boosting the company’s digital presence to keep its products accessible to consumers.

“We’re optimistic about this second half, especially since our first half reflects the full impact of the pandemic… We look forward to executing on all the programs we’ve put in place, especially since it will boost not just our businesses, but also the many other small and medium enterprises in our supply chain,” Mr. Ang said.

SMC posted an attributable net loss of P1.27 billion in the first quarter, a turnaround from its attributable net income of P5.71 billion last year, due to the impact of the pandemic across its business units.

Shares in SMC at the exchange shed 50 centavos or 0.51% to P98.50 each on Tuesday. — Denise A. Valdez