MANILA, Philippines—Alaska Milk Corp. grew its fourth quarter 2011 net profit by 7 percent year-on-year to P432 million as higher volume during this strong season offset tighter margins.
But for the full year of 2011, net profits slumped by 39 percent to P1.1 billion due to higher input costs and slightly slower sales compared to 2010, which was an extraordinary period for the domestic economy being an election year.
In a disclosure to the Philippine Stock Exchange on Wednesday, AMC noted that operating income for the full year, dragged down by higher cost of raw materials, ended 32 percent lower at P1.25 billion. Cost of sales grew by 12 percent to P8.47 billion while operating margin for the year narrowed to 10.6 percent from 19.1 percent a year ago.
Sales volume across the company’s line of milk products staged a strong recovery in the fourth quarter, however, which AMC attributed to various consumer and trade initiatives that were carried out to drive consumption during a seasonally strong fourth quarter. Revenues for the fourth quarter grew by 13 percent to P4.05 billion from a year ago, likewise picking up from the 2 percent year-on-year revenue growth in the third quarter.
Sales volume of its portfolio of liquid canned milk products such as evaporated milk and sweetened condensed milk grew at double-digit rates even as the market contracted amid a slowing economy.
Notwithstanding the 13-percent revenue growth for the quarter, operating income for the three-month period expanded at a slower pace of 1 percent at P516 million from a year ago. This was due to higher raw material costs notwithstanding cost containment programs. Fourth quarter operating margin dropped to 12.7 percent from 14.2 percent in the same period last year.
Cost of sales grew by 22 percent to P2.95 billion from a year ago as cost of skimmed milk powder, sugar and vegetable oil rose substantially from their year-ago levels.
Moving forward this year, AMC said further easing of the international prices of skimmed milk powder was likely after a brief rally in the fourth quarter of 2012 given ample dairy supply.
“Demand for dairy products remained strong, especially from regions that are already short of milk, such as China and South East Asia. Supply, however, is expected to be abundant through early 2012 as a result of a strong milk production season,” the company’s disclosure said.