MANILA, Philippines — Conglomerate San Miguel Corp. (SMC) saw an 18-percent drop in first quarter net profit to P12.8 billion as volatile global oil prices, higher oil taxes, and higher cost of raw materials gnawed on its oil and food businesses.
Three-month consolidated revenues, however, grew by 7 percent year-on-year to P250.9 billion, driven by strong volumes across most of its major businesses.
The P12.8 billion net profit included earnings attributable to minority interest.
For its food business, the government’s lifting of special safeguard duties against import surges led to an industry-wide oversupply and a significant decline in poultry prices. The rising cost of major raw materials – wheat, soybean meal, corn, and cassava – was also a big factor.
Petron, on the other hand, lost 5 percent volume in its Philippine operations on higher taxes on fuel prices. By now, a total of around P4.50-per liter excise taxes plus 12 percent value added tax (VAT) are carried by fuel prices. On a quarterly basis, this translated to around P9 billion in excise taxes and P1.1 billion in VAT.
The volatility in global crude prices also eroded Petron’s refining margins by almost P3.3 billion in the first quarter.
As a result, consolidated operating income declined by 5 percent year-on-year to P31.1 billion in the first three months. Group-wide cash flow amounted to P41 billion.
“The slowdown in these businesses is temporary. We are not taking them lightly and we’re seeing clear signs of recovery. We anticipate higher consumer spending from an improving economy, primarily the easing of inflation. The election season also usually brings us good results. We’ve implemented a good number of measures to recover lost ground and further strengthen our competitive positions in industries where we are in,” SMC president and chief operating officer Ramon S. Ang said.
“We’re off to a good start in terms of our volume and revenue performance. Our businesses are performing strongly despite the challenges, and we are confident that as it was in the past, we will overcome the impact of these economic challenges faced,” he added.