Weak peso hits San Miguel’s first-half profit

Top Philippine conglomerate San Miguel, maker of the beer bearing its name, saw first-half profits fall due to a weak peso. INQUIRER FILE

MANILA, Philippines – Top Philippine conglomerate San Miguel, known best for its beer brewing business, on Wednesday said its first-half profit fell eight percent as a weak peso inflated debt costs.

Interim net income dropped to 16.9 billion pesos ($365 million) between January and June, from 18.4 billion pesos during the same period last year, the company said in a stock exchange filing.

The 125-year-old conglomerate — which also has investments in petroleum, infrastructure and food — said it took a 1.1 billion peso hit from currency movements compared to the same period last year.

Not counting foreign exchange losses, net profit for the period rose 15 percent to 18 billion pesos, it said.

Investors were upbeat on the results, pushing San Miguel shares up 0.18 percent in morning trading in Manila, compared to a more than one percent fall in the broader benchmark index.

“The outlook for San Miguel remains positive,” Angping and Associates Securities research head Juan Rafael Supangco told AFP.

“There is volatility (in the exchange rate) but if you look at core operating income, it actually grew.”

San Miguel and its units have 374 billion pesos in debt excluding interest, more than 70 percent of which is in dollars, according to Bloomberg data.

That has become more expensive to service as the greenback has strengthened on hopes for an imminent US interest rate rise, while the peso has weakened as investors have fretted about a fall in exports from the Philippines.

San Miguel said net profits in its brewery business rose 10 percent to 6.9 billion pesos while its food business posted a five-percent increase to 1.8 billion pesos.

Net income at its oil refinery business, Petron, also rose 13 percent to 3.4 billion pesos, despite weak oil prices, and Supangco said an increase in sales would further boost income this year.