San Miguel Corporation (SMC), the Philippines' largest food and beverage company, today posted a consolidated net income of P1.54 billion ($37.8 million)(1) in the first quarter of this year, an increase of 24% over the P1.24 billion in 1999, amid relatively sluggish consumer demand.

This reflects the effectiveness of the strategies and operational improvements earlier identified and implemented by SMC management.

Operating income jumped 22% from P1.48 billion to P1.81 billion ($44.5 million) as a result of broader distribution, productivity enhancements and continuing cost containment initiatives. Overall operating margins increased from 9.6% to 11%.

Volumes of most of SMC's domestic businesses performed favorably during the first three months of the year, with domestic beer and liquor sales up combined with strong overall volume growth in both the packaging and food businesses. Consolidated net sales amounted to P19.9 billion ($489 million), 9% over P18.3 billion last year.

Financing charges this quarter were 33% lower at P395 million ($9.7 million) versus P587 million last year. Other income of P198 million ($4.9 million) resulted primarily from the amortization of non-compete shares while equity in earnings of P218 million ($5.4 million) came largely from CCA.

Domestic beer sales revenue for the first quarter increased 14% to P8.02 billion ($197.1 million) while volume grew by 6%. Operating income reached P1.3 billion ($31.9 million), up 18% from a year ago.

Beer international shows signs of a sustained turnaround in performance as the various brand-building and rationalization activities earlier initiated started to bear fruit. Operating losses for the first quarter dropped by 82% from US$7.6 million in 1999 to US$1.4 million this year.

La Tondena Distillers, Inc.'s net income for the first quarter amounted to P369.2 million ($9.1 million), a 125% increase from P164.2 million in 1999. Operating income rose by 48% from P472 million last year to P699 million ($17.2 million). Sales revenue grew by 36% from P2.4 billion to P3.2 billion ($7.9 million).

Hard liquor volumes grew 26% due to greater distribution levels through San Miguel Beer's trade network. Bottled water volume surged 68% despite intensified competition from lower-priced water filling stations. Juice volumes increased by 17%.

Excluding the coconut oil business, consolidated volumes of the Food Group grew by 12% while revenue increased by 4% from P3.69 billion in the first quarter of 1999 to P3.85 billion ($9.5 million) this quarter.

Prices continue to soften mainly due to the uncontrolled influx of smuggled poultry products. Combined with cost increases in soya, corn and other commodity raw materials which heavily affected the chicken business, the Food Group's operating income decreased by 66% from P186 million in 1999 to P62 million ($1.5 million).

San Miguel Packaging Products turned in favorable overall results with volumes strongest in the glass, aluminum cans and composites businesses, with growth ranging from 21% to 54%. Metal closure volumes declined by 12%, while plastics volume also declined due to weak demand in the soft drinks industry. Consolidated revenue rose 12% to P3.4 billion ($8.4 million) from P3.0 billion a year ago. Operating income increased by 80% to P497 million ($12.2 million).

Founded in 1890, San Miguel is the largest food and beverage company listed in S.E. Asia and is active within the brewing and beverages, food and food-related, and packaging areas. San Miguel's ordinary shares trade on the Philippine Stock Exchange and trade in ADR form in the US (each equal to ten SMC Class B common shares). Prices for the ADRs may be accessed on the NASD OTC Bulletin Board under the symbol SMGBY. Quotes for San Miguel ordinary shares may be accessed on Bloomberg under the symbol SMC/B PM and on the Reuter Equities 2000 Service under the symbol SMC.

(1) US dollar figures have been converted for reader convenience at the exchange rate of US$1=P40.69.