San Miguel Reports First Quarterly Loss Since 2008 on Weak Peso

San Miguel Corp. (SMC), the largest Philippine company, posted its first quarterly loss since the period ended December 2008 as a weaker peso led to a foreign-exchange deficit.

Net loss was 6.6 billion pesos ($151 million) in the second quarter ended June 30, compared with a profit of 5.65 billion pesos a year earlier, according to figures derived from first-half results announced today by the Manila-based company. Sales fell 4.4 percent to 179.2 billion pesos.

The strengthening of the dollar against the local currency resulted in an “unrealized” foreign-exchange loss in the first half, the company said today in a statement. The company and its units have 243 billion pesos of debt due by 2018, about 149 billion pesos of which are denominated in dollars, according to data compiled by Bloomberg.

“It could only be the debt,” said Astro del Castillo, managing director at Manila-based First Grade Holdings Inc. “The company needs to re-strategize to address that debt issue.”

San Miguel shares fell 0.5 percent to 84 pesos at the close in Manila, before the results were released. The shares have fallen 20 percent this year, compared with the benchmark Philippine stock index’s 11 percent gain. San Miguel is the second-worst performer among 30 companies in the Philippine Stock Exchange Index this year.

Falling Peso

The peso has fallen 6 percent this year and is the worst-performing currency in the region after the yen and the Indian rupee. It fell 5.5 percent in the three months ended June, halting five quarters of gains, according to Tullett Prebon Plc. The drop last quarter was the most in five years.

First-half loss was 2.4 billion pesos on sales of 357.5 billion pesos, San Miguel said in its statement today, without giving year-earlier numbers. First-half profit last year was 13.89 billion pesos on sales of 329.5 billion pesos, according to data compiled by Bloomberg.

Excluding foreign-exchange losses, recurring net income was “sustained” at 7.8 billion pesos in the first half, the company said. Operating income increased 19 percent to 28.9 billion pesos, it said.

“Forex losses mask the solid performance we had in our business,” Chairman Eduardo Cojuangco said in the statement. “We remain bullish about our underlying performance.”

San Miguel, which started as a brewer more than a century ago, has made more than $5.6 billion worth of purchases since 2008 as it expanded into industries such as airlines, oil and power to triple the return it used to get from food and drinks.

The Southeast Asian nation’s most acquisitive company plans to raise about $4 billion by selling power assets, to help fund its transformation from a brewer and foodmaker into an investor in energy, mining, airlines and roads, President Ramon Ang said in a July 12 interview.

The company is seeking to increase revenue to $50 billion pesos in five years after last year’s 30 percent gain to $16 billion, missing a $20 billion goal.

The sale of 64.3 million Manila Electric shares last month resulted in a gain of 9.6 billion pesos, San Miguel said.

To contact the reporter on this story: Cecilia Yap in Manila at

To contact the editors responsible for this story: Jason Rogers at; Colin Keatinge at

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