SMC first half profits declined 33%

Conglomerate San Miguel Corp. (SMC) said higher selling prices and volumes pushed sales higher in the first half of 2022 but profits were pressured by the weakening Philippine peso and pandemic tax adjustments.

The food, beverage, energy and infrastructure giant said net income from January to June sank 33 percent to P19.8 billion amid foreign exchange “movements” and normalized tax expenses from last year’s effectivity of the Corporate Recovery and Tax Incentives for Enterprises Act.

SMC’s total revenues jumped 73 percent to P711.4 billion while operating income rose 41 percent to P85.9 billion. SMC said earnings before interest, taxes, depreciation and amortization increased 13 percent to P91.2 billion.

Earnings were propelled by the outperformance of infrastructure and Petron Corp., whose first semester 2022 earnings exceeded those of the entire 2021.

The food and beverage segment also sustained revenue and profit growth while the power subsidiary saw earnings drop due to the surge in fuel input costs.

“Overall, it’s been a very challenging period, with geopolitical conflict resulting in uncertainties and serious supply and costs issues that are affecting industries all over the world,” SMC president Ramon Ang said in a statement.

“Despite this, and even with the lingering effects of the pandemic, we’re encouraged by the strong and increasing demand for our products and services, as evidenced by our higher volumes and revenues in the first half,” he said. “This shows that our country’s economic recovery and growth are gaining pace.”

San Miguel Food and Beverage, which owns San Miguel beer and Purefoods meats, posted revenue growth of 17 percent to P172 billion.

Inflationary pressures

It cited higher selling prices amid the surging inflationary pressures around the world apart from “volume growth” across beer, spirits and food.

The subsidiary’s consolidated operating income rose 15 percent to P26.6 billion while net income reached P18.8 billion, up 8 percent. For San Miguel Brewery alone, volumes in the first semester hit 108.2 million cases, higher by 11 percent year-on-year. This pushed up total revenues by 20 percent to P65 billion.

Petron’s net income doubled to P7.7 billion as revenues soared 129 percent to P398.5 billion.

It said Philippine and Malaysian volumes grew 34 percent to 51.4 million barrels “on the back of demand recovery due to sustained easing of travel restrictions and the improved pandemic situation.”

SMC’s infrastructure business, which includes the Skyway Stage 3 and Tarlac-Pangasinan-La Union Expressway, saw revenues climb 58 percent to P13.4 billion. Operating income jumped 160 percent to P6 billion due to higher traffic volume.

Power generation unit SMC Global Power Holdings Corp. booked a 26 percent drop in operating income to P12.8 billion. The conglomerate cited the “unprecedented increase in fuel input costs and the deration of the Ilijan gas plant due to Malampaya gas field supply issues.”