Steniel Announces Results for the Third Quarter of 1999

November 16, 1999 PSE CIRCULAR FOR BROKERS NO. 2922-99 STENIEL ANNOUNCES RESULTS FOR THE THIRD QUARTER OF 1999 Steniel Manufacturing Corporation ("Steniel"), Metro Pacific Corporation's holding company for its packaging business, announced today a consolidated net income for the nine months ended 30 September 1999 of Pesos 21 million, a complete turnaround compared to the same period last year's net loss of Pesos 101 million. prcd Financial Review Consolidated sales decreased by 50 per cent to Pesos 1,136 million for the nine months ended 30 September 1999 from Pesos 2,293 million for the same period in 1998 due primarily to the divestment of Starpack Philippines Corporation ("Starpack"), Steniel's former flexible packaging company, to VAW Europack GmbH in December 1998. In addition, a relatively weak sales performance in Luzon as a result of prevailing overcapacity in the region affected adversely the Group's revenues. cdll A significant improvement in the gross profit rate was realized, however, despite a decrease in consolidated revenues. The consolidated gross profit rate increased to 23 per cent for the current period as compared to 17 per cent in 1998 due primarily to various cost reduction initiatives implemented throughout the Group. The gross profit in absolute terms, however, decreased to Pesos 259 million in 1999 from Pesos 397 million in 1999 as a result of a lower revenue base following the disposal of Starpack. Operating expenses, in absolute terms, decreased by 36 per cent from Pesos 229 million in 1998 to Pesos 146 million in 1999. As a percentage of sales, however, operating expenses increased marginally from 10 per cent in 1998 to 13 per cent this year mainly because a reduction in fixed overhead expenses was offset by decreased revenues. LibLex The Group's financing charges also decreased by 60 per cent, from Pesos 250 million in 1998 to Pesos 102 million for the nine months ended 30 September 1999. This was due principally to the substantial reduction in interest bearing debts as a result of the application of the proceeds from the disposal of Starpack, in addition to a lower average cost of borrowing. Steniel acquired in August 1999 the 40 per cent minority interest in Treasure Packaging Corporation, the Group's Cebu operations. As a result of this recent investment, Steniel now owns 100 per cent all its operating subsidiaries, further enhancing the Group's dominance nationwide. Financial Condition Total consolidated assets decreased from Pesos 3,773 million as of 30 September 1998 to Pesos 2,626 million as of 30 September 1999, principally because of the divestment of the flexible packaging business. Total consolidated equity however, improved from Pesos 1,267 million as of 30 September 1998 b Pesos 1,415 million at the current quarter end. LexLib Summary and Prospects Napoleon L. Nazareno, Steniel's President and Chief Executive Officer, commented: "We are now beginning to realize the fruits of the various initiatives instituted during the early part of the year as evidenced by our current quarter end's operating results. The Steniel Group has just turned the corner and we are confident that we will be able to sustain the modest improvements already realized. With four plants nationwide, we are confident that Steniel is now in a better position to achieve and sustain long-term viability." cdlex