SMC posts P2.4-B net loss

Conglomerate San Miguel Corp. incurred a net loss of P2.4 billion in the first semester that, according to the company, was due mainly to unrealized foreign exchange losses.

The six-month net loss, which reversed the P14.12-billion net profit in the same period last year, was brought about by the strengthening of the dollar against the peso (that resulted in paper losses as SMC marked-to-market foreign currency assets). The peso has lost 6 percent against the greenback since the start of the year.

SMC recognized foreign exchange losses of P10.2 billion in June. Excluding unrealized forex losses, however, SMC’s recurring net income was sustained at P7.8 billion in the first half.

In a statement, the company said the group’s  unrealized foreign exchange losses were almost fully covered by actual gains of P9.6 billion from the sale of 64.3 million Meralco shares in July.

“Forex losses mask the solid performance we had in our businesses. But we remain bullish about our underlying performance, which we attribute to a series of competitive advantages that should help us moving forward,” SMC chair Eduardo Cojuangco Jr. said.

Cojuangco said SMC remained “positive and confident about these businesses’ ability to turn in durable results and deliver on their commitments for the remainder of the year.”

New and core businesses are also seen to further mitigate the effects of currency fluctuations.

SMC’s total revenue was up 9 percent to P357.5 billion in the first six months of the year. This was due mainly to the strong six-month earnings growth reported by food subsidiary San Miguel Pure Foods. Revenue was also boosted by the consolidation of Petron Malaysia into the group last April.

Operating income rose 19 percent year-on-year to P28.9 billion, brought by lower generation costs posted by SMC Global Power and increases in the volume of production of the food group’s operations.

SMC said favorable raw material prices, helped by higher cassava supply and better overall efficiency, also contributed to the increase in operating income. These gains largely offset the effects of the increase in excise taxes on beer and liquor and the volatility in crude prices, which adversely affected oil refining unit Petron Corp. in the second quarter.

Group-wide cash flow based on earnings before interest, taxes, depreciation and amortization rose by 9 percent year-on-year to P40.9 billion.

“Overall, the numbers reflect the progress we are making, along with the areas where we need to work harder,” Cojuangco said.

SMC’s net debt stood at 3.64 as a ratio of 12-month rolling Ebitda, still below a multiple of 5.5 allowed under the company’s agreement with creditors.