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 industrywide 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.
Oil refining arm Petron Corp., 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 plus 12 percent value added tax (VAT) are carried by fuel prices. On a quarterly basis, this translated to around P9 billion in excise 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. Groupwide 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.
SMC’s other major businesses continued to deliver strong results.
Consumer arm San Miguel Food and Beverage Inc. grew net profit by 1 percent to P7.4 billion higher volumes and revenues across its beer, hard liquor and food businesses.
SMC Global Power Holdings Corp. posted a 23-percent year-on-year growth in first quarter operating income to P9.8 billion as off-take volume grew by 42 percent to 6,826 gigawatt-hours.
This increase was due to the longer operating hours at the Ilijan and Sual power plants, full contributions from units 2 and 3 of the Malita and Limay power plants, and the full year-to-date recognition of operations of the Masinloc plant.
Consolidated revenues grew by 41 percent year-on-year to P34.7 billion.
With the volatility in global crude prices and lower refining margins, Petron’s operating income and net income declined by 45 percent and 77 percent, respectively, to P4.9 billion and P1.3 billion.
SMC Infrastructure’s operating income rose by 1 percent year-on-year to P3.1 billion, while consolidated revenues went up by 8 percent to P6.4 billion.
The company broke ground for the South Luzon Expressway-Toll Road 4 project on March 26.
The Swiss challenge phase for the company’s proposed New Manila International Airport project has also started. Meanwhile, the construction of the Skyway Stage 3, Metro Railway Transit 7, and stage 2 of the Bulacan Bulk Water projects are seen to be “going well.”