Cosmos Posts Record P3.5 Billion in Net Sales For 1998

April 7, 1999 PSE CIRCULAR FOR BROKERS NO. 682-99 NEWS RELEASE APRIL 6, 1999 REF: B.J . SEBASTIAN TEL: 6345609 FAX: 6320839 COSMOS POSTS RECORD P3 . 5 BILLION IN NET SALES FOR 1998 "Heavy consume spending plus a hot summer resulted in spectacular growth in the industry in 1998" This was the assessment of Antonio I. Panajon, President and Chief Operating Officer of Cosmos Bottling Corporation, beverage subsidiary of food giant RFM Corporation, in a report presented to Cosmos shareholders in their annual stockholders' meeting held today. Strong demand for softdrinks led to a record-breaking P3.5 billion in net sales, the highest ever that the company has ever achieved. This figure is a 29% increase over net sales of P2.75 billion posted in 1997. Net income after tax however, reached only P540.5 billion, up a modest 6% from the P508 million posted in the previous year. "A 23% rise in the average cost of sugar in 1998 pressured margins, particularly in the fourth quarter of the year.", the report stated. Jose A Concepcion III, Cosmos Chairman and CEO added that the company was able to hold its own in 1998 despite intense competition from its multinational competitors. "Our strategy of expanding the business with prudent levels of capital expenditures helped us preserve our cost structure, margins and returns despite the very difficult sugar situation that beset the industry in 1998, and the continuing devaluation of the peso which affected the cost of some of our key inputs." Concepcion said. cdlex "Furthermore, our ability to manage our sugar costs by buying stocks forward helped ease the pressure for most of the year. Also, improvements in operating efficiencies kept other cost items at bay." Panajon added. On the prospects for the industry this year, Concepcion said that they see more stable and normal demand growth, and no wild swings in costs and turnover. Moreover, with sugar prices still elevated, but forecasted to decline moderately for the balance of the year, Cosmos is looking at more sober earnings expectations. Concepcion however, sees a possible upside in sales and earnings if year-end celebrations boost demand beyond expectations. "Like it or not, this is the last year of the 1900's and the turn of the millennium. People are going to be celebrating and food and beverage demand is expected to benefit immensely from this." Concepcion said. Cosmos will continue its efforts to build awareness and improve the image of Pop Cola, its flagship brand. Encouraged by recent surveys that show Pop Cola's growing popularity among the broad-based market, Cosmos is doubling its marketing budget this year to establish and solidify the gains it has achieved over the past 6 years. "On this, the last year of the 1900's, it is our intention to enter the coming millennium with a stronger position in the market, a stronger brand and a stronger financial position. Opportunities abound in the coming new century, and we are committed to put Cosmos in the best possible position to take advantage of these opportunities." Concepcion said. LLpr