SMC seen to recoup forex losses

LONDON—Conglomerate San Miguel Corp. expects to return to profitability and reverse its foreign exchange losses in 2013 as the peso continues to strengthen against the US dollar.

At the same time, its lead shareholder Top Frontier Investment Holdings is now scouting for investment opportunities, including those in coal mining, SMC president Ramon S. Ang said.

Ang told Manila-based reporters that SMC would reverse the foreign exchange losses it incurred in the first half of the year.

The peso gained strength during the last quarter of the year, “when overseas Filipino workers started remitting their income,” Ang said, explaining that SMC would thus be able to post a positive bottom-line for the full year.

In the first half, SMC incurred a net loss of P2.4 billion, which was attributed by the company mostly to unrealized foreign exchange losses.

The six-month net loss, a turnaround from the P14.12 billion net profit in the same period last year, was due to the strengthening of the US dollar against the peso which, in turn, resulted in losses on paper.

SMC booked foreign exchange losses of P10.2 billion.

Excluding unrealized forex losses, the company said it managed to sustain its recurring net income at P7.8 billion for the first half.

While other companies such as banks were reported to be marking record-high earnings of P18 to P20 billion, Ang said this would just be equivalent to the operating income of SMC’s beer unit, San Miguel Brewery, which amounted to $700 million.

Overall, Ang described SMC to be “in a good position, with very strong cash flow.”

For Top Frontier, Ang said once the “decoupling” of shares were implemented, the holding firm could get into other businesses.

“Top Frontier has good investment at the moment and, of course, Top Frontier can invest more in coal projects. Right now, the coal business is on the low end (of prices due to the commodity cycle), so I think there’s an opportunity for us to invest in those businesses,” Ang said.