San Miguel Food and Beverage Sustains Growth; Expansion Plans On Track
San Miguel Food and Beverage Inc. (SMFB, PSE: FB) registered consolidated revenues of PHP151 billion for the first half of the year, up 10% from last year, driven mainly by healthy volume expansion across key products of the consumer giant.
Cost and pricing pressures from the food group, however, weighed on margins resulting in a 6% drop in consolidated operating income to PHP21.6 billion. Consolidated net income ended 5% lower at PHP14.7 billion.
The company’s poultry segment, in particular, reeled from an industry-wide oversupply that began late last year. But with current prices showing signs of recovery, the group is confident it will get out of the slump sooner than expected.
“Despite challenges impacting some of our businesses, we remain positive about the company’s overall growth prospects given our unique position to capture the opportunities directly linked to our fast-growing economy,” SMFB president and CEO Ramon S. Ang said.
SMFB’s beer business continued to deliver strong revenue and volume growth, coming from its domestic operations.
Revenues for the period rose by 12% to PHP70.3 billion amid strong nationwide consumption of leading brands Red Horse and San Miguel Pale Pilsen. Domestic volumes grew by more than 10% on the back of effective sales and marketing programs that further strengthened the equity of its brands, and solidified its leading position.
It is also on track with its expansion plans following the construction of two new breweries in Tagoloan, Northern Mindanao and Sta. Rosa, Laguna.
SMFB’s spirits and liquor business, on the other hand, exceeded expectations, growing its revenues by 20% to PHP14.7 billion in the first semester. To boost the brand equity of its core brands, it re-launched the Ginebra jersey collection promotion, hosted “Ginumanfest” events, and ran the “Dosenang Lakas May Instant Pa-Buenas” under-the-cap promotion for Vino Kulafu. These helped grow volumes by 17%, bulk of which were driven by flagship brand, Ginebra San Miguel.
Meanwhile, the food group continued to benefit from higher volumes from a strong portfolio of brands that includes Magnolia, Purefoods, B-MEG, Star, Magnolia, DariCreme, and La Pacita. As a result, revenues increased by over 5% over PHP66.1 billion for the period.
To ease pressure on margins, the group has been focusing on growing its value-added business, resulting in double-digit growth for its prepared and packaged food segment, as well as topline growth across its processed meats, dairy, and spreads businesses.
Recently, it started its own roasted chicken business under the Magnolia Chick ‘n Juicy brand. The business has been growing rapidly and has allowed the company to increase customer touch points and sell its poultry products via more stable channels.
It has also been investing in additional facilities for feeds, flour, prepared and packaged food, and poultry and fresh meats to meet the demands of a fast-growing consumer market.