SMC to hit ‘hairy’ revenue goal in 2-3 years
Conglomerate San Miguel Corp. (SMC) expects to breach the P1-trillion revenue goal in the next two to three years as the group completes a massive expansion program of traditional and new businesses.
“In the next five years, we could grow revenues by about 50 percent, so roughly 10 percent per year,” SMC chief finance officer Ferdinand Constantino told reporters on the sidelines of a roadshow related to a P20-billion bond offering.
The target is to double operating income in the next five years, translating to an annual expansion of 13-14 percent each year.
If not for the downtrend in oil prices, which in turn has affected the revenue contribution of the fuel and oil business, SMC senior vice president Aurora Calderon said the P1-trillion revenue goal would have been hit by 2018 or 2019. But relying only on organic growth, she said the goal may be achieved by 2019 to 2020.
As such, Constantino said the P1-trillion revenue goal—identified a decade ago as SMC’s big hairy audacious goal (BHAG)—could be hit “maybe in two years’ time.”
Revenues have expanded to P674 billion in 2015 from P168 billion when SMC started its diversification program in 2008. In the first nine months of 2016, revenues amounted to P513.21 billion versus P505.5 billion in the comparative year.
New businesses, such as fuel and oil, power generation and infrastructure, now account for 66 percent of SMC’s revenues, Constantino estimated.
In terms of cash flow, he said SMC has expanded its earnings before interest, taxes, depreciation and amortization by about 5.5 times to P210 billion from P20 billion.
This 2017, however, SMC does not expect to replicate the extraordinary financial performance seen last year.
“Last year, all the good things happened—elections, very strong economy, moderate inflation, declining fuel prices and then weather was also good,” Constantino said.
“This year, we think the economy will still grow. Inflation will still be moderate. We don’t know what will happen to the foreign exchange rate. Fuel will go up, so there will be effect on consumers,” Constantino said, but “we still think 2017 will be a good year.” —DORIS DUMLAO-ABADILLA
