San Miguel Diversifies, Bucks Economic Downtrend.

July 2009. Conglomerate San Miguel Corporation (SMC) emphasized that its aggressive diversification program is a way to secure future growth for the company and spur economic growth and development in the Philippines.

Bucking the global economic downtrend, San Miguel posted positive results for 2008, which reported P19.3 billion in consolidated net income for 2008, 124% higher than in 2007, is currently undertaking a massive diversification into important industries such as power generation, oil refining, telecoms, water distribution, tollways, and infrastructure.

In his address to stockholders at the company’s annual meeting, SMC Chairman and Chief Executive Officer Eduardo M. Cojuangco Jr., said:
“Beyond seeking profit, we want to be in industries that serve as the backbone of our country’s development, and impact the lives of Filipinos in a meaningful way. We have complete confidence in our country’s potential.”

San Miguel recently invested in Manila Electric Co. (Meralco), the country’s largest power distributor. It has also signed an option agreement to acquire UK-based Ashmore Group’s 100% stake in Sea Refinery Corp., which holds 50.1% of the Philippines’ largest oil refiner, Petron.

The company has also acquired 32.7% of Liberty Telecommunications Holdings, Inc. In February 2009, it submitted an unsolicited proposal for the government’s Laiban Dam project.

More recently, San Miguel announced that it had entered into a non-binding agreement to acquire a significant stake in Private Infrastructure Development Corp. (PIDC), the consortium behind the 88.57-kilometer Tarlac-Pangasinan-La Union Toll Expressway project.

Cojuangco reported:
“We have moved beyond consumer products and services, and are working towards programs that make a real difference in people’s lives. We are proud to be part of a San Miguel that keeps as many people as possible working, earning and contributing to the economy”

“We hope to see in a few years, more efficient and affordable electricity services, more accessible and affordable fuel, the creation of thousands of new jobs, and a sustainable supply of potable water for millions of residents in the National Capital Region.”

Cojuangco pointed out that despite the world’s deepening economic woes, San Miguel was able to attract foreign investors from Japan, Southeast Asia, the United States, and the Middle East for its projects.

The chief executive, however, acknowledged lingering scepticism from some quarters for the company’s strategy, first articulated in 2007. He said.
“Some of these doubts still linger, but let me assure you that the San Miguel we have built has the resources and preparedness to run these new ventures as efficiently as we do our traditional businesses. While the global financial meltdown has sent many companies into full retreat, our company is powering ahead, investing heavily in a strategy to reaccelerate growth.”

Minus non-recurring gains on the sale of investments, SMC reported strong net income results, totaling P7.22 billion, 4% higher than in the previous year. Its consolidated sales revenue rose 14% to P168 billion and operating income was up by 26% to P14.8 billion. Cojuangco assured the stockholders, saying:
“As shareholders ourselves, we understand that dividends and earnings from our investments are tied very much to the company’s annual gains. These new ventures will add more value to our investments—complementing the contributions of our traditional businesses.”

San Miguel stockholders, meanwhile, voted in favor of an Exchange Offer to convert 1.104 billion common shares to series 1 preferred shares. Cojuangco explained that while they are optimistic about SMC’s the long-term value, this alternative would be for “more conservative” investors who may have a different risk profile.


Source: San Miguel Press Release.

San Miguel Sets its sights on Dole Philippines

Philippine food and beverage giant San Miguel Corporation confirmed it has expressed interest in taking over operations of global agro-industrial company Dole Food Co., in the Philippines and in other Asian countries as part of its core business expansion.

Ramon Ang, SMC President and Chief Executive Officer said:
"San Miguel is interested in Dole Philippines, but it is willing to consider Dole’s other units within the region"


San Miguel used to own a minority stake in Dole’s rival, Del Monte Pacific Ltd., but sold out to partner group of condiments magnate Jose Campos Jr., two years ago.

Dole Philippines Inc. has a 24,000-acre base plantation, two cannery complexes with a can plant, a packaging plant and fresh fruit packaging plant in Mindanao with shipping and wharf operations. Dole also has 18,000 acres of grower farms in South Cotabato and Sarangani.

Dole employs almost 6,000 regular employees with product lines including canned pineapple solids, canned mixed fruits, canned beverages, packaged fruit snacks and tomato sauce.

Dole Philippines has a division that produces and exports cavendish bananas to Japan, Korea, China, Hong Kong, New Zealand and the Middle East, controlling a third of the Philippines’s banana industry in terms of plantation size and volume of shipment throughout Asia-Pacific.

Zamboanga 2008 Agriculture Production Down. Corn Dropped 17%

The Philippines' National Census and Statistics Board reported lower agricultural production in Zamboanga peninsula for 2008: palay dropped 0.44%, camote by 5%, corn by 17.24%, abaca by 19%. Higher production was reported for calamansi (9.72%) and cassava (5.57%).

Total palay production output during January to December 2008 for Zamboanga Peninsula decreased by about 0.44 percent or 2,449 metric tons(MT) lower compared to the same period last year (CY 2007) due to decrease in available area for harvesting by about 2.0 percent.

This decrease is due to the damage caused by a flash flood during the 4th quarter of 2008 particularly in Salug valley area in Zamboanga del Sur. Zamboanga Sibugay also suffered from a flash flood last March 8, 2008 that affected the areas of about 499 hectares in Imelda, Diplahan, Siay and partly in Payao.

Tropical depressions Buchoy and Frank also damaged 32 hectares in mid-year, affecting palay production in Zamboanga City.

Total corn production output in Zamboanga Peninsula for January-December 2008 dipped 17.24 percent or 37,870MT. lower compared last year (CY 2007) due to continuous rainfall experienced by almost all provinces in the region, particularly in the province of Zamboanga Sibugay in which 186 hectares were flooded during the first quarter of 2008.

Harvest area also decreased by 16.25 percent due to significant number of marginal farmers temporarily stopped planting corn attributed to high cost of fertilizers. Some farmers shifted to cash crops that can be grown without fertilizer application like Cassava, Mongo and Peanuts.


The selected crops production of Zamboanga Peninsula for calendar year 2008 registered a slight decrease of 1.41 percent or 32,612.89MT. lower compared to the preceding year.

Highlights:

• Abaca dropped 19.92 percent due to lack of striping machine for marginal area, particularly in the province of Zamboanga Sibugay.
• Camote dropped 5.30 percent due to excessive rainfall during the 3rd and 4th quarter of 2008 in the province of Zamboanga del Sur.
• Coconut w/ husk (Matured and Young) dropped by 1.69 percent due to lower yield attributed by long dry spell experienced in some parts of the region beginning 2007.
• Mango dropped in production due to excessive rain causing failure of artificial induction to produce fruits.
• Rubber reduces its volume of production due to defoliations, in some parts of Zamboanga del Sur during the 4th quarter of 2008.
• Calamansi posted an increase of 9.72 due to demand of juice making and processing in both Zamboanga Sibugay and Zamboanga City.
• Banana and Cabbage increased 2.55 percent and 0.53 percent, respectively due to demand and good market value.
• Cassava increased 5.57 percent due increase in area planted, plus support of the San Miguel Corporation and Local Government Units (LGU’s).

Source: NCSB Press Release