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San Miguel: net profits rise

Philippine food and beverage conglomerate San Miguel Corp., one of the largest companies in the Philippines, said first-quarter net profits rose 24%, better than expected, on higher sales and improved…

Philippine food and beverage conglomerate San Miguel Corp., one of the largest companies in the Philippines, said first-quarter net profits rose 24%, better than expected, on higher sales and improved operating efficiencies. San Miguel said net profit came to Pso 1.54 billion (US$ 37.1 million), compared with 1.24 billion a year earlier. Analysts had expected profit of between Pso 1.4 billion and 1.5 billion. Sales rose 8.7% to Pso 19.9 billion on higher volume in San Miguel“s domestic businesses – beer, liquor, packaging and food. Revenue from domestic beer sales rose 14% to Pso 8.02 billion, and volume expanded 6%. Excluding the firm“s coconut-oil business, consolidated sales volume in the food division grew 12%, while revenue rose 4% to Pso 3.85 billion. However, prices continue to soften mainly because of the uncontrolled influx of smuggled poultry products, San Miguel said. In the packaging-products division, revenue rose 12% to Pso 3.4 billion. Sales volume was strongest in the glass, aluminum cans and composites businesses. Metal closure volumes declined 12%, and plastics volume fell because of weak demand in the soft drinks industry. San Miguel“s international beer operation narrowed its operating loss by 82%, to US$ 1.4 million. San Miguel said the operation is beginning to show signs of a sustained turnaround. San Miguel“s liquor and beverage subsidiary, La Tondena Distillers Inc., posted first-quarter net profit of Pso 369 million, more than double the year-earlier level of Pso 164 million. Overall, San Miguel“s operating margins increased from 9.6% to 11%, San Miguel said, and financing charges fell 49%, to Pso 395 million. Analysts said they are confident San Miguel will see growth in 2000 over the 1999 level. “The company“s subsidiaries are doing well and there“s strong consumer demand,” said Spencer Yap, of BPI Securities. Analysts warned, however, that a slowdown in the country“s agricultural output could hurt the bottom line, because it would put pressure on farm income. The rural sector accounts for a significant portion of San Miguel“s beer and liquor market.

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