San Miguel Nets P1.31 Billion in 3rd Quarter

October 28, 1999 PSE CIRCULAR FOR BROKERS NO. 2769-99 SAN MIGUEL NETS P1.31 BILLION IN 3RD QUARTER San Miguel Corporation reported a net profit of P1.31 billion in the third quarter of this year. On a recurring basis, this represents an increase of 113% over the same period last year. This, despite continued softness in consumer demand. Income from operations in the third quarter grew by 24%, from P1.18 billion in 1998 to P1.47 billion this year, largely as a result of improvements in the company's international operations, better margins in the packaging business, on-going Improvements in distribution and the streamlining of the Company's business operations. The company experienced mixed results in terms of sales volumes; with packaging, processed meats and dairy products recording strong growth; while beer, hard liquor, juice, pork and coconut oil registered declines largely occurring in July and August. San Miguel ended the quarter with aggregate volumes slightly down and consolidated net sales at P17.6 billion. Net financing charges were significantly lower at P321 million compared to P870 million last year. San Miguel Brewing Philippines (SMBP) registered revenues of P6.27 billion, an increase of 3% from that in 1998. Adverse weather conditions pulled down domestic beer volumes in July and August, but the downtrend was reversed in September. Revitalizing its distribution network and pushing for wider market penetration particularly In underserved areas remain the priority at SMBP. Thus trade management efforts such as rationalization, training and greater support to distributors have been implemented. llcd San Miguel's international operations turned in an operating profit of US$3.55 million in the third quarter, versus a loss of US$6.41 million last year, due to efforts to aggressively reduce overhead costs. San Miguel continues to work on improving sales and increasing utilization of capacities, reviewing its brewing operations in China, Indonesia and Vietnam to identify areas for further improvement and streamlining. Consolidated revenue of La Tondena Distillers, inc. improved by 1% from P2 43 billion to P2.45 billion. Net income grew by 74% to P274 million despite a decline in hard liquor volumes because of adverse weather conditions and a shift by consumers in the south to lower-priced native liquor. La Tondena's bottled water business posted a 40% increase in sales over last year, boosted by the newly-acquired Wilkins brand. The ready-to-drink juice business also experienced significant growth, driven by strong sales of FunChum Juice. San Miguel Food Group showed improved sales for most of its products, with sales of processed meats, butter, margarine and cheese showing the greatest improvement. Aggregate sales volumes grew by 5% while revenue grew by 2% to P3.8 billion. On the other hand, coconut oil volume was down by 73% for the quarter. Revenue amounted to P478 million, down 69% largely due to the lack of copra supply. In packaging, aggregate sales volumes grew by 18% over the previous year with glass rebounding from the previous quarter's decline. Sales revenue was 6% higher at P3.02 billion from P2.85 billion last year. Aggressive sales efforts, favorable demand, cost containment efforts and lower raw material costs resulted in operating income of P297 million, up 9% from P273 million in 1998. Improving sales volumes and market share in the face of a weak economy remains a priority at San Miguel, company officials said. The company continues to focus on managing costs and reducing working capital while it refines its strategies in the effort to turn out more profitable growth.