5 March 1998: Recent press reports say that profits at the Philippine food and beverage group, San Miguel, halved in 1997 to P 2.96 billion (US$ 72.9 million), a 51.4% drop from P 6.09 billion in 1996…
5 March 1998: Recent press reports say that profits at the Philippine food and beverage group, San Miguel, halved in 1997 to P 2.96 billion (US$ 72.9 million), a 51.4% drop from P 6.09 billion in 1996. The company said the decrease was due to the peso crisis, lower beer prices, the increased costs of funds and overseas expansion. Supposedly San Miguel, which was until the beginning of February the focus of a prospective takeover by Hong Kong“s First Pacific, has been one of the companies worst hit by the regional crisis in the Philippines, according to press reports. The company announced that it would be “pursuing a more pro-active debt and foreign currency management strategy by which it has been able to pay off most of its dollar-denominated short-term debt and fully hedge the little that remains”. Reports say the company is still making dollar-denominated losses overseas, mainly in China and Indonesia. Losses for the group“s international beer operations deepened 77% to P 1.15 billion after increased marketing efforts. Net sales grew 8% to P 67.1 billion, but were exceeded by cost of sales and operating expenses, which rose 12% to P 63.5 billion. Analysts said that while the short-term business outlook for San Miguel was “unexciting,” the proposed restructuring of Coca-Cola Amatil, the Australian bottler in which the Philippine group has a 25% stake, could bring about P 10-15 billion in earnings. Meanwhile, the company also said it had decided to put on hold any new investments and limit capital spending to balance the impact of the current financial and economic difficulties on its operations. For 1998, the conglomerate said it will pursue a strategy “designed to safeguard the company“s profitability and conserve its resources in view of the present financial and economic uncertainties.” In particular, SMC said it will freeze any new investments and limit capital expenditures “only to those that are absolutely essential.” The company is also implementing a cost reduction programme, which includes cutting working capital.