Stronger sales, price hikes shield SMC food unit from Ukraine fallout

The listed holding company of conglomerate San Miguel Corp.’s (SMC) iconic brands such as San Miguel beer and Purefoods saw “stable” profits in the first quarter of the year despite the sharp jump in commodity costs.

San Miguel Food and Beverage Inc. (SMFB) shielded its bottomline through a combination of price increases and better sales, which was supported by looser pandemic restrictions during the period.

SMFB thus ended the January to March period with a net income of P9.2 billion, up 1 percent, while revenues grew 9 percent to P83.1 billion.

“We remain optimistic and steadfast in pursuing strategies that will drive long-term value for our shareholders,” SMFB and SMC president Ramon Ang said in a statement.

“As the market continues to be dynamic, we will continue to manage the inflationary environment with the same level of discipline that carried us through the years,” he added.

Alongside competition, SMFB encountered challenges via rising raw material prices and supply chain disruptions caused by the Russia-Ukraine invasion.

Consolidated earnings

The company partially blunted the impact through “better pricing across multiple categories in its beer, spirits and food businesses.”

The company’s food business recorded revenues of P40.8 billion, up 13 percent. Other segments such as animal nutrition, health and flour segments also posted higher sales.

Consolidated earnings before interest, taxes, depreciation and amortization (Ebitda) for food shed 6.5 percent to P5.7 billion while operating income dipped lower by 6.7 percent to P4.2 billion.

SMFB’s beer business grew revenue by 3 percent to P29.7 billion due to higher volumes and price adjustments, the statement showed, while Ebitda and operating income were flat.

“The beer business will continue to implement cost management initiatives to preserve profits moving forward,” SMFB said in the statement.

“Nonetheless, the reopening of on-premise channels following the lifting of COVID-19 restrictions has boosted the beer business’ prospects for the rest of the year,” it added.

The group’s spirits business, which include gin market leader Ginebra San Miguel, saw an 11-percent jump in revenues to P12.6 billion. Ebitda surged 32 percent to P2 billion while operating income was similarly higher by 39 percent to P1.8 billion.