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SMC earns ₱1.1 B in Q1, to raise $1 B

By James A. Loyola

Diversified conglomerate San Miguel Corporation (SMC) is raising up to US$1 billion through the issuance of perpetual securities even as it reported a drop in first quarter earnings due to the COVID-19 pandemic.

SMC president and COO Ramon S. Ang

SMC president and COO Ramon S. Ang

In a disclosure to the Philippine Stock Exchange, SMC said its Board of Directors has approved the issuance either in US dollars or its equivalent Philippine pesos.

The perpetual securities will not be offered to the public. They will have a fixed rate, cumulative, and payable on a quarterly basis.

Meanwhile, SMC reported a 91 percent drop in consolidated net income to ₱1.09 billion in the first quarter of the year from the ₱12.83 billion earned in the same period of 2019.

The firm said that, despite a strong start in the first two months of the year, there was an expected drop in its first quarter performance due to adverse conditions and the impact of the COVID-19 global pandemic that grounded most economic activities to a halt.

Net sales declined 15 percent to ₱214.06 billion in the first quarter of 2020 from ₱250.92 billion in the same period last year.

In March, the ECQ necessitated a total liquor ban, the suspension of public transportation, as well as stay-at-home-orders and local lockdowns that stopped virtually all vehicle movement except for essential travel and the closure of many companies which reduced power demand by as much as 40 percent.

“This is an unprecedented crisis we are in, and many countries all over the world continue to struggle to cope,” said SMC president Ramon S. Ang.

He added that, “Like most big and small businesses in the Philippines, we are also affected but we maintained our focus on cost reduction and cash preservation amid the COVID-19 crisis.”

“Right now, our priority is really to ensure the continuous and efficient delivery of our products and services for the people, strengthen and expand new programs we’ve initiated during this crisis that have worked for us, implement our plan to safely bring our workforce back, and continue to help the country manage the impact of this pandemic,” said Ang.

The company’s financial position remained stable for the first two months with revenues of ₱160.5 billion and consolidated EBITDA that is broadly in line with previous year at ₱21.3 billion.

For January and February this year, revenues for SMC’s Food and Beverage business and Packaging unit were growing by 7 percent, and 8 percent, respectively.

The Power business was also posting volume growth, offset by weaker prices amid oversupply, and the implementation of a power bidding mechanism that further brought down prices for generators.

The Fuels business on the other hand, was beset by falling crude prices as early as February.

San Miguel Food and Beverage, Inc.’s consolidated net income dropped by 21 percent to ₱5.8 billion while the San Miguel Packaging Group’s operating income amounted to ₱570 million, 31 percent lower than 2019.

SMC Global Power Holdings Corp.’s operating income and net income amounted to ₱7.8 billion and P₱3.2 billion, 21 percent and 10 percent lower, respectively.

Petron Corporation incurred a net loss of ₱4.9 billion, compared to the net income of ₱1.3 billion in the previous year. This is due largely to significant inventory losses resulting from the collapse of crude oil prices.

SMC Infrastructure’s operating toll roads registered a 15 percent volume decline. Consolidated revenues fell 27 percent to ₱4.7 billion, while operating income stood at ₱1.8 billion.


Source: Manila Bulletin (https://business.mb.com.ph/2020/05/29/smc-earns-%e2%82%b11-1-b-in-q1-to-raise-1-b/)

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