San Miguel cans Del Monte venture

By Neil Merrett

- Last updated on GMT

Related tags: Del monte

San Miguel is to sell its minority stake in Pacific-based Del
Monte, which it holds in a joint venture with the NutriAsia
group.

The sale of its share to NutriAsia will net the Philippines-based brewer $150m (€110m). The company says exiting the operation will allow it to concentrate on growing its core operations over the coming year. San Miguel's move comes as increasing competitiveness within the country's food industry is forcing companies to focus on their main business. The joint venture, NutriAsia San Miguel Holdings, owns NutriAsia Pacific Ltd. which in turn owns 84.5 per cent of Del Monte Pacific, a group of companies engaged in the production, marketing and distribution of food and beverages. It owns the Del Monte brand in the Philippines and is not an affiliate of Del Monte Corporation and its parent, Del Monte Foods Company, including Del Monte Asia Pte Ltd. However, NutriAsia's Del Monte holds the right to use the Del Monte brand. The joint venture was created in 2005 and provided for an eventual sale of the San Miguel stake to NutriAsia, said Ramon Ang, San Miguel's president. "In terms of our larger corporate strategy, this move is also consistent with our plan to drive growth for our company by concentrating our resources in areas where we have full control and the strongest competitive positions,"​ he said. Under their joint tenure, Del Monte Pacific's operations were turned around in 2006. Del Monte Pacific recorded a 13 per cent rise in profit to $21m (€15m) following a difficult year in 2005, when revenues declined by 34 per cent. The San Miguel decision follows encouraging full year 2006 results for the company. Operating income rose by 18 per cent during the year, defying difficult conditions in the market. A general decline in consumer spending was further compounded by two tornadoes during the fourth quarter that dampened the company's expectations. Despite these difficulties, San Miguel still posted a strong performance, credited to sales growth throughout the company's food and beverage divisions. The group's beer segment reported a 15 per cent increase in operating income over the previous year to P9.5bn (€147m). The rise was complimented by improving performance in its beer export markets. In China, revenues grew by five per cent over 2005. San Miguel's other product segments recorded similar growth, allowing the company to offset the affects of the adverse weather and decreased consumer spending. San Miguel's food segment reported operating income increased by 38 per cent over 2005, aided by a break in raw materials prices and greater operating efficiency. Operating profit at its Australian subsidiary, National Foods, rose 10 per cent to AU$170 (€104m). However, the group's liquor segment was hit hard by increased prices for molasses and packaging that resulted in lower income for the year of P773 (€11m).

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