San Miguel’s 2013 Profit Rises 42% on Manila Electric Stake Sale

San Miguel Corp.’s profit rose 42 percent last year as gains from the sale of its stake in Manila Electric (MER) Co. countered losses caused by the peso’s fall.

Net income rose to 38.1 billion pesos ($847 million) in the 12 months to Dec. 31 from 26.8 billion pesos a year earlier, the largest Philippine company said today in a statement. Fourth-quarter profit was 30.6 billion pesos, derived from the nine-month profit of 7.5 billion pesos reported in November.

San Miguel (SMC), a century-old brewer that has transformed itself with investments in oil, power and infrastructure, in October sold a 27 percent stake in Manila Electric for a gain of 40 billion pesos. That helped to negate a 15.6 billion peso foreign-exchange loss, the company said. The peso fell 7.6 percent in 2013, the fourth-worst performance in the region.

“San Miguel’s reported earnings have always been very volatile because it regularly sells assets and borrows foreign exchange, which have accounting effects,” Jomar Lacson, research head at brokerage Campos Lanuza & Co. in Manila, said by phone. “The company must establish a core profit definition so investors can appreciate its achievements more.”

Shares rose 1 percent to 73.50 pesos at the close in Manila, its highest since Dec. 2. The stock is up 18 percent this year after falling 33 percent in 2013, its biggest annual decline based on records dating back to 1991.

Oil accounts for about 60 percent of the company’s revenue. About 25 percent comes from food and drinks and 10 percent from power, according to data compiled by Bloomberg. In 2008, food and drinks accounted for about 90 percent of sales.

Sales Climb

Sales increased 7 percent to 748 billion pesos last year, according to the statement. Operating income rose 7 percent to 55.1 billion pesos.

Oil unit Petron Corp. on March 24 said net income last year more than doubled to 5.1 billion pesos from 1.78 billion in 2012, boosted by higher sales at its Philippine and Malaysian operations.

San Miguel Brewery Inc., which controls about 90 percent of the nation’s beer market and is 51 percent owned by San Miguel, in February said profit last year fell 17 percent to 12.5 billion pesos as sales dropped following a tax increase. Japan’s Kirin Holdings (2503) Co. holds about 48 percent of the brewer. SMC Global Power Holdings Corp.’s operating income increased 20 percent to 20.5 billion last year, its parent said.

San Miguel has expanded into heavy industries amid accelerating economic growth in the Philippines. The economy expanded 7.2 percent last year, the fastest growth in three years, data compiled by Bloomberg show.

The company has 450.7 billion pesos in debt and cash of 191.6 billion pesos, it said in a presentation posted on its website. The nation’s largest company is also its most indebted, according to data compiled by Bloomberg. It has 61.6 billion pesos of debt and interest falling due this year, data show.

To contact the reporters on this story: Cecilia Yap in Manila at cyap19@bloomberg.net; Clarissa Batino in Manila at cbatino@bloomberg.net

To contact the editors responsible for this story: Chua Baizhen at bchua14@bloomberg.net; Andrew Hobbs at ahobbs4@bloomberg.net Abhay Singh, Indranil Ghosh

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