Pandemic hits San Miguel with 91% profit drop to P1 billion

PROFITS of San Miguel Corp. (SMC) crashed 91% in the first quarter as the coronavirus disease 2019 (COVID-19) pandemic led to a double-digit decline across its business units.

In a presentation to investors Thursday, the conglomerate reported a net income of P1.09 billion in the three-month period, down from P12.83 billion in the same period last year.

Net sales fell 15% to P214.07 billion while income from operations dropped 62% to P11.73 billion.

In a statement, the company pointed to quarantine measures as the primary drag on its businesses. The rising cases of COVID-19 in March led to a Luzon-wide lockdown, which limited mobility and banned liquor across the island.

As a result, SMC’s fuel business Petron Corp. swung to a net loss of P4.9 billion from last year’s net income of P1.3 billion. Aside from the drop in fuel demand because of transportation restrictions, the price war between Russia and Saudi Arabia in March resulted in an oil price drop locally.

SMC’s food and beverage unit posted a net income decline of 21% to P5.8 billion. Sales from beers and spirits fell 18% and 15%, respectively, as alcoholic beverages were prohibited in places under lockdown. This was tempered slightly by a 2% growth in food sales because of higher demand for essential products.

Revenues from power unit SMC Global Power Holdings Corp. dropped 18% to P28.3 billion as off-take volumes fell 3% to 6,600 gigawatt hours. The company attributed it to the deferred start of supply agreements and contract extensions.

SMC Infrastructure, under which are SMC’s toll roads, posted an operating income of P1.8 billion. Consolidated revenues fell 27% to P4.7 billion. The implementation of a lockdown and the subsequent limitation of toll roads to essential vehicles resulted in a 15% decline in volume.

The packaging business generated an operating income of P570 million, down by 31% year-on-year, as its revenues slid 4% to P8.5 billion. It said orders for its products from food and beverage sectors declined, keeping it reliant on the steady demand from health and pharmaceutical customers.

“This is an unprecedented crisis we are in, and many countries all over the world continue to struggle to cope. Like most big and small businesses in the Philippines, we are also affected but we maintained our focus on cost reduction and cash preservation amid the COVID-19 crisis,” SMC President Ramon S. Ang said in a statement.

“Right now, our priority is really to ensure the continuous and efficient delivery of our products and services for the people, strengthen and expand new programs we’ve initiated during this crisis that have worked for us, implement our plan to safely bring our workforce back, and continue to help the country manage the impact of this pandemic,” he added.

Shares in SMC at the stock exchange declined 10 centavos or 0.10% to P95.90 each on Thursday. — Denise A. Valdez