SMC operations suffer due to pandemic

Conglomerate San Miguel Corp. (SMC) saw a 91-percent year-on-year drop in first-quarter net profit to P1.09 billion as the lockdown measures required to address the new coronavirus (COVID-19) pandemic gnawed on its beer, oil, infrastructure and energy businesses.

The P1.09-billion net profit level included earnings attributable to minority interest.

SMC’s consolidated first-quarter revenues declined by 15 percent to P214 billion while cash flow as measured by earnings before interest, taxes, depreciation and amortization (Ebitda) slipped by 34 percent to P27 billion.

Consolidated net sales fell by 62 percent while income from operations declined by 62 percent year-on-year to P11.73 billion.

“This is an unprecedented crisis we are in and many countries all over the world continue to struggle to cope. Like most big and small businesses in the Philippines, we are also affected but we maintained our focus on cost reduction and cash preservation amid the COVID-19 crisis,” SMC president Ramon S. Ang said.

“Right now, our priority is really to ensure the continuous and efficient delivery of our products and services for the people, strengthen and expand new programs we’ve initiated during this crisis that have worked for us, implement our plan to safely bring our workforce back, and continue to help the country manage the impact of this pandemic. Our economy and day-to-day lives depends on how well we can all work together as one nation to fight COVID-19,” he added.

The conglomerate fared well in the first two months of the year, generating revenues of P160.5 billion as well as consolidated Ebitda that was broadly in line with previous year at P21.3 billion. Staring mid-March, however, the enhanced community quarantine (ECQ) required a total liquor ban, the suspension of public transportation as well as stay-at-home-orders and local lockdowns that stopped virtually all vehicle movement, except for essential travel, and the temporary closure of many companies that reduced power demand by as much as 40 percent.

SMC Global Power Holdings Corp.’s consolidated revenues for the first three months fell by 18 percent to P28.3 billion as off-take volumes declined due to the deferment of new supply agreements and contract extensions. Operating income and net income declined by 21 percent and 10 percent, respectively, to P7.8 billion and P3.2 billion.

Beer and spirits sales also slowed down as a result of the liquor ban implemented by local government units in Metro Manila and key cities in Luzon. This was partly offset by higher sales from the food division, particularly the prepared and packaged food segment.

Oil refining unit Petron incurred a net loss of P4.9 billion, reversing the net income of P1.3 billion in the previous year. This was due largely to significant inventory losses resulting from the collapse of crude oil prices.