Consumer giant San Miguel Food and Beverage Inc. (SMFB) saw a 20 percent year-on-year drop in first quarter consolidated net income to P5.8 billion as the enhanced community quarantine (ECQ) and liquor bans in key cities gnawed on its beer and hard liquor businesses alongside the increase in excise taxes.
“The road to recovery may be long. However, over the last 130 years, we successfully overcame many challenges. We remain confident that with our strong fundamentals and ability to deliver good and affordable products to our consumers, we will overcome this once again,” SMFB president and chief executive officer Ramon S. Ang said on Thursday.
Consolidated revenues declined by 9 percent year-on-year to P69 billion, while consolidated operating income declined by 20 percent to P8.6 billion.
While its beer and spirits divisions started the year with good momentum, the declaration of the ECQ, together with the imposition of liquor bans across key cities, dragged down sales of its alcoholic beverages. This was partially offset, however, by higher sales from the food division, which grew its consolidated revenues by 2 percent year-on-year to P33.2 billion.
While the protein and animal nutrition business posted a 3 percent decline in revenues, the company reported a significant spike in sales of some food categories as consumers stocked up on essential supplies leading up to and during the ECQ period.
The food Division managed to keep all the plants running and maintained the “highest levels of safety and hygiene in all its premises,” the company reported. As a result, revenues of the processed food segment expanded by 16 percent, with strong demand in the processed meats, dairy, spreads, biscuits, and coffee segments.
Recovering from the widespread glut in 2019, the protein and animal nutrition segment registered a positive operating income of P1.2 billion during the first quarter, a turnaround from losses of P577 million last year.
The beer division posted consolidated revenues of P28.4 billion, 18 percent lower year-on-year.
Volumes for San Miguel Brewery were up by single digits in the first two months of the year but volume in March dropped due to the ECQ and the resulting liquor bans. Similarly, the spirits division grew sales volumes by 15 percent year-on-year in the first two months, but ended the quarter 14 percent less year-over-year. First quarter revenues amounted to P7.5 billion, 10 percent lower than last year.
Nonetheless, SMFB said it had the “solid financial foundation to weather the current situation, including a strong balance sheet, relatively light debt service obligations, and ample liquidity.”
SMFB is likewise taking appropriate steps to manage its expenses and capital expenditures moving forward while supporting communities across the Philippines with local relief efforts.
Through the San Miguel Foundation, SMFB has donated canned goods, poultry, flour, Nutribuns, biscuits, and coffee, among others, to over 1.6 million families. It also converted its liquor distilleries to produce over 1.2 million liters of alcohol that were distributed to close to 4,000 hospitals nationwide.
“During these difficult times, we remain steadfast in our commitment to ensure that there is enough food for every Filipino. It is our goal to provide nourishment and safety especially to the most vulnerable communities,” Ang said.
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