SMFB food growth cushions weaker H1 beer earnings

Insider Spotlight

• Net income eased 4 percent to P22.1 billion despite a 2-percent increase in revenue
• Food remained the main growth driver, with revenue up 5 percent and net income rising 8 percent
• Beer earnings weakened as consumers pulled back on discretionary spending and Middle East shipping disruptions hurt exports
  
  
  

San Miguel Food and Beverage Inc. (SMFB) posted a modest increase in first-half revenue, but weaker profitability in its beer business offset gains from its food and spirits segments as consumers remained cautious amid inflation and slower economic growth. 

Why it matters

The diversified food and beverage company continues to benefit from resilient demand for staple food products, although macroeconomic pressures are weighing on discretionary categories such as beer. Export operations also faced headwinds from geopolitical disruptions.

By the numbers

Revenue rose 2 percent to P205.3 billion from a year earlier. Gross profit was steady at P58.4 billion, while earnings before interest, taxes, depreciation and amortization (Ebitda) slipped 1 percent to P38.8 billion, with the Ebitda margin at 19 percent. Operating income declined 4 percent to P28.8 billion, while net income also fell 4 percent to P22.1 billion.

Ramon S. Ang

Chair, SMFB

Driving the results

The Food business led growth, with revenue increasing 5 percent to P99.3 billion on stronger feed sales and sustained demand for Magnolia dairy and coffee products, Purefoods luncheon meats, Pinoy Favorites and value offerings. Operating income rose 2 percent to P8.8 billion, while net income climbed 8 percent to P6.4 billion.

Beer remained the group's biggest earnings contributor, although revenue slipped 1 percent to P73.7 billion as consumers became more selective in discretionary spending. Domestic sales were steady at P66 billion, supported by a price increase that helped offset higher excise taxes. 

International revenue fell to $128.5 million as shipping disruptions in the Middle East affected deliveries. Beer operating income dropped 11 percent to P14.4 billion, while net income declined 12 percent to P11.4 billion.

Meanwhile, spirits revenue was steady at P32.3 billion, as higher pricing offset weaker volumes. Operating income increased 8 percent to P5.4 billion, while net income rose 3 percent to P4.4 billion.

What they're saying

“Our business remained resilient through the first half of the year, supported by the strength of our operations and the hard work of our teams across the businesses,” SMFB chair Ramon S. Ang said in a statement. “We are managing our costs carefully, adding capacity where demand is growing, and keeping our brands within reach,” Ang added. 

What's next

SMFB ended the first half with total equity of P205.3 billion, up 4 percent, alongside improved liquidity and leverage ratios. 

The company said consumer demand is likely to remain under pressure in the near term but plans to continue investing in capacity, operations and its supply chain while maintaining cost discipline to support long-term growth. —Vanessa Hidalgo| Ed: Corrie S. Narisma