San Miguel 2005 profit seen at P8.9B
Posted: 2:39 AM Mar. 03, 2006
Elizabeth L. Sanchez
Inquirer
BEVERAGE and food conglomerate San Miguel Corp. is expected to report a 2005 net income of P8.9 billion, compared with P8.0 billion in 2004, Inquirer sources in industry said.
If it does report that amount of profit, San Miguel will beat some analysts' expectation that it will post a 2005 net income of P7.3-P7.8 billion.
Analysts have noted San Miguel's high financing charges arising from major overseas acquisitions, and anemic sales growth in its beverage and liquor units.
The sources said, however, that San Miguel's revenue growth more than offset the financing charges.
Some analysts expect revenue growth of 21-34 percent in 2005 with contributions from the newly acquired businesses, which include Australian dairy company National Foods Ltd. and brewery Berri Ltd., and Malaysian ice cream brand King's Creameries.
In July-September 2005, National Foods pitched in 24 percent to San Miguel revenues and accounted for 31 percent of San Miguel operating profits.
San Miguel's Philippine businesses did not fare as well.
Leo Venezuela, analyst at ATR Kim Eng Securities said San Miguel's liquor unit, Ginebra San Miguel Inc., would weigh on the parent company's growth because of high raw material costs.
Some consumers have started shifting to beer from gin because the price difference has narrowed, he added.
Improvements to boost revenues of San Miguel's Coca-Cola beverage group have also yet to bear fruit, analysts said.
Martin Español, an analyst at online broker 2TradeAsia.Com, said demand for food and beverage last year was pulled down by the expanded value-added tax.
"We are hoping for a slightly better performance this year as San Miguel begins to integrate its acquisitions," Español said.
San Miguel recorded a January-September 2005 net income of P5.23 billion, down 6.1 percent from P5.57 billion in the same period in 2004, with high charges on loans used to acquire control of National Foods.
Financing charges amounted to P3.28 billion during the period, without which the net income would have increased by one percent.
In the nine-month period, San Miguel's consolidated revenue grew 32 percent year-on-year to P161 billion.
San Miguel said National Foods Ltd. and Berri Ltd. made hefty contributions to foreign revenues in the January-September period.
The consolidation of National Foods into San Miguel, begun in June 2005, contributed P15.9 billion to revenue and P1.46 billion to operating profit as of end-September.
San Miguel said it registered double-digit growth across its businesses during the period.
However, the rising costs of raw materials, packaging and utilities tempered gains in operating income to P12.2 billion, up nine percent year-on-year. With INQ7.net
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