SMFB posts revenue, profit growth in 2019; fundamentals strong amid ongoing crisis

San Miguel Food and Beverage, Inc. (SMFB) the food and beverage arm of San Miguel Corporation (SMC), reported strong results for 2019 registering consolidated revenues amounting to P310.79 billion, 9% higher than the prior year. Consolidated net income amounted to P32.28 billion, 6% higher year-on-year, while consolidated operating income amounted to P47.78 billion, up 4%.

SMFB’s growth momentum carried through in the first two months of 2020, with all divisions generating sales volume growth. However, the impact of the COVID-19 pandemic, which forced a stop to virtually all economic activities, weighed down on the company’s performance towards the end of the quarter.

As a result, first quarter consolidated revenues declined 9% year-on-year to P69.02 billion. This was partially offset, however, by higher sales from its Food Division.

An increase in excise taxes for its Beer and Spirits Divisions in the early part of this year also affected consolidated operating income and consolidated net income as both declined by 20% to P8.64 billion and P5.83 billion, respectively.

SMC president and chief operating officer Ramon S. Ang said despite the impact of the crisis, SMFB is well-placed to weather the current situation.

“Our strong fundamentals enabled us to get through this period. SMFB has a strong balance sheet, manageable debt service obligations, and ample liquidity. The company is also taking the appropriate steps to manage its expenses and capital expenditures moving forward,” Ang said.

Following the consolidation of its operating businesses in 2018–namely, San Miguel Brewery Inc., San Miguel Foods, and Ginebra San Miguel Inc.–SMFB started broadening its category reach to capitalize on synergies and further strengthen its business.

It has also started to leverage on the extensive networks that each business has built through the years and has maximized the unique value proposition of San Miguel Corporation’s other businesses.

Very early on in the crisis, SMFB President and Chief Executive Officer Ramon S. Ang gave clear marching orders to the company to ensure food sufficiency and availability for the Filipino people.

Since the beginning of the enhanced community quarantine (ECQ) in March, SMFB worked around the clock to ensure continuous food production. It also spearheaded the largest food relief and donation drive in SMC history amounting to over half a billion pesos worth of food donations to date.

This consists of canned goods, poultry, flour, biscuits, coffee, and rice, among others, donated to local government units (LGUs), NGOs, food banks and vulnerable communities nationwide.

The effort is estimated to have benefited over 1.6 million families since the start of the quarantine period.

It also repurposed its spirits facilities to produce over 1.2 million liters of alcohol that were distributed to close to 4,000 hospitals, medical facilities, and government offices nationwide.

SMFB also produced its version of the nutribun, a vitamin-fortified bread that was first introduced in the 1970s to combat malnutrition. It has since distributed over 600,000 nutribuns to various affected communities nationwide.

It has also provided support to the agriculture sector, especially small farmers, by purchasing raw materials from them at guaranteed prices.

For the broader market, SMFB also ensured that its products were more accessible to consumers by adding new distribution channels. These include rolling reefer van stores stationed at a number of Petron stations, a fleet of Manukang Bayan on Wheels for easier access on the community level, and an online ordering system.

The company also helped roll out Kadiwa ni Ani at Kita rolling markets, in partnership with the Department of Agriculture (DA), to enable farmers to sell their fresh produce to more consumers via Petron service stations.

“The COVID-19 pandemic has many social and economic challenges to the forefront. As one of the largest food and beverage companies today, we have a responsibility to deliver vital necessities to our consumers and support the most vulnerable communities nationwide,” said Ang.

“From this crisis, we also learned of the importance of the need for more inclusive growth. Moving forward, our company commits to providing opportunities that will help build more resilient communities that will help pave the way for a more resilient economy,” he added.

Ang thanked the entire SMFB workforce for its unparalleled commitment to business continuity and, more importantly, for helping the hardest-hit communities from day 1 of the pandemic.

“You make me feel so proud of the work that you are doing, making a difference in the lives of so many people. You went beyond the call of duty with malasakit. These are very challenging times, but you made it easier. I cannot thank all of you enough,” Ang added.