PSE Circular for Brokers No. 1898-99

July 30, 1999 PSE CIRCULAR FOR BROKERS NO. 1898-99 July 29, 1999 SMC SUSTAINS GROWTH MOMENTUM, EARNS P2.72 B IN FIRST SEMESTER San Miguel Corporation (SMC) registered a net income of P2.72 billion during the 1999 first semester, up 276% over last year, reflecting the revitalized performance of SMC's core businesses and significantly reduced financing charges. Consolidated net sales slid 2% to P37.5 billion from P38.2 billion as a result of a sales decline in coconut oil following the contraction in copra supply. Consolidated operating income rose 45% to P3.15 billion due to better operating margins at La Tondena Distillers Inc., San Miguel Packaging Products and San Miguel Food Group, as well as the reduction of losses at San Miguel Brewing International. These operating units posted increases in operating income of up to 96%. San Miguel Brewing Philippines' (SMBP) sales revenue grew by 4%, to P14.1 billion from P13.6 billion. Volumes remained steady despite a price increase in April. During the period, SMBP invested heavily to improve distribution by expanding its dealership network and strengthening support to the trade. The benefits of these programs and the price increase will be realized by the third and fourth quarters. cdpr Overseas, sales revenues of San Miguel Brewing International Ltd. (SMBIL) rose 13% to US$111 million from US$98.7 million last year. Aggregate beer volumes rose by 9%, propelled by a 64% growth in Indonesia. Operating losses shrunk by 57% to US$8.6 million from US$19.9 million. Buoyed by increased volumes, higher selling prices, and significantly reduced debt levels and interest expense, La Tondea Distillers Inc. (LTDI) nearly tripled its net income, to P434 million from last year's P152 million. Consolidated revenues rose 9% to P5.07 billion from P4.67 billion. San Miguel Packaging Products (SMPP) registered consolidated operating income of P610 million 30% higher than in 1998. Sales revenues, at P6.18 billion, were 3% lower than the previous year because of sluggish markets and competitive pricing pressures. Increases in sales revenues were posted across the San Miguel Food Group, except in coconut oil. Excluding the coconut oil operations, the food group's revenue improved by 5 %. San Miguel Foods Inc.'s revenue increased by 2% to P4.5 billion from P4.4 billion. At Monterey Foods Corporation, revenue grew by 6% in the first half to P1.3 billion from P1.22 billion in 1998. San Miguel CampoCarne's revenue went up by 10% to P480 billion from P435 million, driven by higher hotdog sales volumes. Revenue for Philippine Dairy Products Corporation was 16% better than 1998. Coconut oil volumes of SMC's COMRO unit fell 63% compared to last year due to low industry supply of copra, while revenue dropped 51% to P1.05 billion from P2.2 billion in 1998.