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San Miguel 1Q Net Profit Up 19% At PHP8.5 Billion

05/11/2012 | 06:34am US/Eastern
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-- San Miguel first-quarter net profit rises 19%

-- Bottom line boosted by solid growth at its brewery and power businesses

-- However, oil refining unit Petron Corp. records 28% fall in net profit on surging costs

(Adds earnings details in 2nd paragraph, revenue contribution of San Miguel's various businesses in 3rd to 7th, background in 9th and 10th graphs)

By Rhea Sandique-Carlos

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A strategy of business diversification and a varied investment portfolio helped underpin a 19% growth in first-quarter net profit for San Miguel Corp. (SMC.PH), as strong contributions from its brewery and power generation businesses offset lackluster refining operations.

San Miguel, which dominates the Philippines' food and beverage industry, diversified into heavy industries in recent years, taking controlling stakes in oil refiner Petron Corp. (>> Petron Corporation), power-generation companies and toll road operations to ensure future earnings growth--a gamble which has yielded results in the first quarter of this year.

First-quarter net profit rose 19% to PHP8.5 billion from PHP7.1 billion a year earlier, with consolidated revenue improving 12% to PHP142 billion from PHP126.6 billion, as majority of its business segments recorded growth.

San Miguel Brewery (>> San Miguel Brewery, Inc.), the beer manufacturing unit of San Miguel, reported a first-quarter revenue of PHP18.34 billion, a 5% rise from PHP17.53 billion a year earlier, even though sales volume during the period declined 4% to 54.5 million cases from 56.5 million cases.

The decline was due mostly to lower domestic sales, which totaled 45.8 million cases compared with 48.5 million cases. But overseas sales helped to cushion the decline, with exports totaling 8.7 million cases, a 9% rise from 8.0 million a year earlier.

San Miguel's food business also posted higher revenue growth, with sales totalling PHP22.39 billion, a 9% rise from PHP20.59 billion a year earlier.

The conglomerate's energy unit, San Miguel Global Power, reported first-quarter revenue of PHP19.36 billion, a 19% increase from PHP16.33 billion a year earlier.

However, San Miguel-controlled Petron, the Philippines' largest oil refiner by sales and capacity, reported 28% on year fall in first-quarter net profit to PHP2.5 billion, due to lower export volumes and higher production costs.

San Miguel last year completed its acquisition of a 65% stake in Esso Malaysia Berhad. It last month acquired a 49% equity stake in the holding companies of Philippine Airlines and Air Philippines, expanding its commercial interests to the airline sector.

-By Rhea Sandique-Carlos, Dow Jones Newswires; 632-848-5051; rhea.sandique-carlos@dowjones.com

Stocks mentioned in the article : Petron Corporation, San Miguel Brewery, Inc.
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