SMC ups profits, eyes further regional growth

Related tags Juice

San Miguel
Corporation, the largest food and beverage group in southeast
Asia, has reported a steep increase in both its turnover and net
profits for the first six months of the year. The figures come on
the back of increasing activity outside the domestic market and
coincide with its announcement to form a joint venture with an
Australian fruit juice manufacturer.

SMC said that in the first six months of the year its net income increased by 31 per cent to PHP 4 billion (€58.7m), driven by an increase in corporate volumes of 6 per cent and a 13 per cent increase in consolidated sales, up to PHP 81.3 billion.

Operating income was up 32 per cent to PHP 8.11 billion as benefits were reaped from fixed cost containment from its Coca-Cola operations, significant improvements in the food group and the recovery of beer operations in the international market, the company said.

One of the most significant improvements in sales came from the company's domestic beer operations, as beer volume grew by 19 per cent, largely due to increased consumption of beer during the country's recent general elections.

The company also reported what it termed as 'substantial progress' in its regional expansion programme. So far this has entailed groundbreaking for new drinks facilities in Indonesia, Thailand and Vietnam. And only today the company has announced a 50 per cent joint venture in Australian fruit juice manufacturer, Berri.

The new venture couples SMC up with the leading fruit juice player in the Australian market. Currently Berri has an estimated 50 per cent share of the Australian fruit juice market and an estimated 65 per cent share in the rapidly growing fresh juice market. It sells leading brands such as Mr. Juicy, Mildura Sunrise and Daily Juice.

SMC first set up business in Australia back in 2000 when it bought up premium beer manufacturer, J. Boag & Son. The acquisition of Berri adds to the company's growing portfolio in Australia and helps extends its market reach in the drinks market there.

With the addition of its new drinks operations throughout the region, SMC is hoping that its operations outside of the Philippines should extend to 30 - 40 per cent of its total income, compared to the current 15 per cent. As part of this ambition the company says that it wishes to expand its operations to Malaysia, Taiwan and China, on top of the other four markets it has already undertaken new operations in during the last three months.

Analysts believe that stiff competition throughout the region could mean that SMC will be hard stretched to achieve its aims, but the company says it is confident it can achieve these results on the basis that its products and brands have widespread appeal.

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