San Miguel Returns to Profit on Energy Demand, Peso Recovery

San Miguel Corp., the largest Philippine company, returned to second-quarter profit as a recovery in the peso cut the interest of its mostly dollar-denominated debt and demand gained for its energy business.

Net income in the quarter ended June was 9.8 billion pesos, compared with a loss of 6.6 billion pesos a year earlier. The quarterly result was derived from first-half figures reported by the Mandaluyong City-based company today.

San Miguel, the Southeast Asian nation’s most acquisitive company, has the equivalent of $12.1 billion in debt and interest obligations, about $9.1 billion of which is in dollars, according to data compiled by Bloomberg. In the quarter, the peso rose 2.5 percent against the dollar, Asia’s best performer after the South Korean won, halting four quarters of losses.

The shares fell 1.3 percent to 77 pesos at the close in Manila, before the earnings were released. The stock has gained 23 percent this year, compared with an 1.81 percent gain in the benchmark stock index.

First-half net income was 12 billion pesos, the company said, while first-quarter profit was 2.2 billion pesos. Revenue in the first six months rose 13 percent to 405 billion pesos on double-digit growth by its power and oil businesses.

Oil Shift

Oil accounts for 64 percent of San Miguel’s sales, food 12.5 percent, drinks 11 percent and power generation about 10 percent, according to data compiled by Bloomberg. In 2008, food and drinks were 90 percent of sales.

Operating income increased 14 percent to 33 billion pesos. Majority-owned unit Petron Corp., the nation’s largest oil company, on Aug. 6 said first-half profit rose to 3 billion pesos from 1.1 billion pesos a year ago on higher sales in the Philippines and Malaysia. SMC Global Power Holdings Corp.’s net sales increased 16 percent to 43.8 billion pesos, the parent company said.

San Miguel said it had 200 billion pesos in cash and total assets of 1.17 trillion pesos as of June 30. The company said its infrastructure projects, which include an airport in the island resort of Boracay, are proceeding as scheduled.

Unit San Miguel Pure Foods had a net income of 1.7 billion pesos in the first six months of the year. San Miguel Brewery Inc., which sells nine of 10 beers in the Philippines and is 51 percent owned by San Miguel, posted sales of 37.7 billion pesos, compared with 36.8 billion pesos a year earlier.

(An earlier version of this story corrected the sales increase at SMC Global.)

(Updates with cash, asset in penultimate paragraph.)
    Before it's here, it's on the Bloomberg Terminal.