SMC expects P57-B profit in 2013

By Neil Jerome C. Morales, The Philippine Star

Posted at Jan 14 2014 07:56 AM | Updated as of Jan 14 2014 06:00 PM

MANILA, Philippines - Diversified conglomerate San Miguel Corp. (SMC) likely recorded better-than-expected profits in 2013 due to the full recognition of gains from its divestment in power distribution giant Manila Power Co. (Meralco), the company’s top executive said.

SMC president and chief operating officer Ramon S. Ang said the company might have hit the P57-billion income mark last year.

“Our initial estimate was P39 billion but because of the sale of the Meralco shares, [income will go up] if it is fully booked,” he said.

In September, JG Summit Holdings Inc. of the Gokongwei family struck a deal to buy a 27-percent stake in Meralco for P72 billion from SMC. It marked the exit of SMC from the utility giant, allowing it to focus on various investment opportunities like infrastructure projects and oil and gas acquisitions.

“Our earnings have always been in the uptrend for the last 15 years,” Ang told reporters.

In 2012, SMC’s net income surged 57 percent to P27.6 billion while consolidated net income before minority interest jumped 35 percent to P38.6 billion on higher gains from other investments and favorable foreign exchange rates.

SMC’s earnings from its divestment in Meralco is more than enough to offset the lower income in January to September last year. In the nine-month period, SMC’s net earnings sank 60 percent to P7.5 billion from P18.7 billion a year ago, weighed down by a foreign exchange loss of P12.3 billion.

Without the unrealized foreign exchange losses, however, the company’s recurring net income hit P11.1 billion in the nine-month period, up 15 percent from a year ago.

Ang said the conglomerate’s core earnings is stable, with more than $2 billion in earnings before interest, taxes, depreciation and amortization (EBITDA) annually.

Once the upgraded Petron refinery goes online, SMC will book a minimum of $800 million EBITDA, Ang said.

“The businesses of SMC are continuously improving,” Ang said, adding that new power generation plants will contribute to earnings.

Power generation unit SMC Global Power Holdings Corp. will make its – debut in the local bourse this year, Ang pointed out.

“The power investments of SMC, we will go for listing definitely this year,” he said.

SMC Global, which has a power generation capacity of 2,500 megawatts, aims to raise at least $1 billion through the sale of a significant minority stake. The company filed its listing plans to corporate regulators in 2011 but the initial public offering was deferred.

Other mature businesses will also be listed, Ang said.

From its core brewery (San Miguel Brewery) and food business (San Miguel Pure Foods), SMC has expanded into power production, downstream oil sector (Petron), packaging (San Miguel Yamamura Packaging Corp.), airline (Philippine Airlines) and several infrastructure projects like the Caticlan airport, Skyway and the NAIA Expressway.