SMC posts ‘sustained’ recovery in second half of 2020

SAN MIGUEL CORP. (SMC) posted a net income of P25.87 billion in the second half of 2020, a reversal of nearly P4 billion in net loss seen in the first semester.

In a press release on Thursday, the diversified conglomerate also said that its July-December profit was 15 times higher than what it recorded in the same period in 2019.

The company’s net sales for the period reached P373 billion, up by 6% from P352.8 billion in the first half.

“While it has not been a good year for all businesses and our economy overall, we’re encouraged by the sustained recoveries that our businesses showed in the second half,” SMC President and Chief Operating Officer Ramon S. Ang said in a statement.

“There are still so many challenges ahead and [there’s] a lot of uncertainty. But we believe our economic recovery is underway as the vaccine rollout gathers pace,” he added.

For 2020, SMC’s net income amounted to P21.88 billion, declining by 55% from P48.57 billion in 2019.

Net sales for the year dropped by 29%, amounting to P725.8 billion from P1.02 trillion in the previous year.

San Miguel Food and Beverage, Inc. (SMFB) recorded a net income for the year of P22.4 billion, 31% down from the P32.28 billion in 2019.

Net sales of SMFB saw a 10% decrease to P279.29 billion from P310.79 billion. SMC said the improvement posted by its beer business and the packaged foods segment in the second half of the year was offset by lower volumes in the protein and animal nutrition and health segments.

SMFB division San Miguel Brewery, Inc. saw its net income decline by 36% to P17.46 billion from P27.29 billion. Net sales for the brewery hit P107.93 billion, 24% lower than its 2019 sales worth P142.27 billion.

Meanwhile, the net income of SMFB’s Ginebra San Miguel, Inc. (GSMI) division in 2020 soared by 65% to P2.76 billion from P1.67 billion, while its revenues posted a 25% jump to P36.20 billion from P29.06 billion.

“GSMI benefited from continued strong consumption with volumes reaching 38.6 million cases. Marketing promotions, thematic campaigns, coupled with the continued expansion of its distribution reach, helped drive growth,” the company said.

San Miguel Foods saw its income for the year decline by 17% to P2.87 billion from P3.45 billion. Revenues for the SMFB division inched down by 3% to P135.17 billion from P139.46 billion.

The company said its prepared and packaged food segment posted a solid performance despite the pandemic, brought by food delivery services and higher dine-in activities in the second half of the year.

“Seasonal demand surge during the holidays, together with incremental sales from community resellers, an alternative channel we created at the height of quarantine restrictions that has since grown significantly, contributed to the food business’ improved performance,” the company said.

The conglomerate’s power unit SMC Global Power Holdings, Corp. saw its income grow by 31% to P18.87 billion from P14.36 billion in 2020. Full-year revenues amounted to P115.03 billion, 15% lower than 2019’s P135.06 billion.

“This was mainly due to the deferment of the mid-merit power supply agreement with Meralco (Manila Electric Co.), the extended contract with Masinloc (Masinloc Power Partners Co. Ltd.), and low average realization rate from new power contracts,” the company said.

SMC Global Power is also developing more infrastructure for its services.

“SMC Global Power completed its Masinloc Unit 3 with a capacity of 335 MW in September 2020, while the construction of its 1000-MW capacity BESS project is now in full swing,” the company said.

While it saw small improvements in the second half of the year, oil company Petron Corp. incurred a net loss of P11.41 billion, a reversal from its 2019 income of P2.30 billion. Revenues also saw a 44% decline to P286.03 billion from P514.36 billion in 2019.

“Consolidated sales volumes from both Philippine and Malaysian operations down 27% to 78.6 million barrels, from 107.0 million barrels a year ago,” the company reported.

SMC’s infrastructure unit recorded revenues of P14.56 billion in 2020, down by 38% from P23.41 billion in the previous year due to the travel restrictions implemented to curb the spread of the coronavirus disease 2019 (COVID-19).

Operating income meanwhile dropped to P2.57 billion from P11.44 billion.

SMC Infrastructure opened Skyway Stage 3 to the public, which links the South Luzon Expressway in Alabang to North Luzon Expressway in Balintawak, a project which cuts travel time from the southern tip of the metro to its northern area.

In December 2020, SMC issued and listed P13.8 billion Series 2-K preferred shares at the exchange with an annual interest rate of 4.5%.

Despite most of its units posting a decline in 2020, Mr. Ang said the company is committed to delivering its products and services this year.

“We will continue to stay focused on gaining performance improvements in this new normal while pursuing initiatives that generate jobs and deliver tangible assets to fuel our economy’s growth,” SMC’s Mr. Ang said.

SMC shares at the stock exchange closed at P121.00 apiece on Thursday, down by 2.42% from P123.50. — Keren Concepcion G. Valmonte