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SMPP: 1997 performance

30 April 1998: According to recent press reports, San Miguel Corp.“s packaging division, San Miguel Packaging Products (SMPP), continued to perform well in 1997, despite increased competition and hig…

30 April 1998: According to recent press reports, San Miguel Corp.“s packaging division, San Miguel Packaging Products (SMPP), continued to perform well in 1997, despite increased competition and higher costs resulting from the regional currency turmoil. The division“s aggregate sales volume increased by 20%, while sales revenue grew 19% to Pso 11.1 billion from Pso 9.31 billion. The division“s composite packaging products business registered an increase of 16% in sales volume. Revenue rose by 14%, while operating income posted an 18% increase from last year. The business waged a strong sales and marketing campaign that penetrated large multinational companies. It expanded printing capacity to tap the new growth opportunities. SMPP“s glass business rode on heightened competition in the soft drink industry and growth in the beer business. All four domestic plants of the division exceeded the previous year“s operating income levels. However, due to an over-capacity in the regional glass packaging industry, two of its off-shore plants incurred operating losses. The market in Southern China has begun to shift to second-hand bottles while that of Vietnam remained depressed during the year. With the flood of competing imported packaging products, higher costs brought on by the currency crisis and the need to support SMC“s beer and soft drink operations with price discounts, SMPP cut down fixed costs, negotiated discounts and concessions from suppliers, and mounted an aggressive sales push. In addition, the division continued to diversify markets by developing new customers. In 1998, slower growth is seen for the packaging industry in Southeast Asia as the effects of the currency turmoil are expected to dampen overall economic growth in the region, which in turn is will worsen the over-capacity situation in the packaging industry, according to the report. The current pace of tariff liberalization the Philippines is taking is also expected to add to the difficulties faced by Philippine packaging companies.

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