Forex losses, CREATE law pull down SMC’s H1 income

Conglomerate San Miguel Corp. (SMC) said its income in the first half slid 33 percent to P19.8 billion from last year’s P29.57 billion, partly as a result of the effects of foreign exchange (forex) losses and the CREATE law.

Recurring income, which excludes forex losses and the CREATE Law or the Corporate Recovery and Tax Incentives for Enterprises Act, rose 24 percent to P32.48 billion from last year’s P26.09 billion.

Consolidated sales revenue rose 73 percent to P711.4 billion from the previous P410.12 billion on sustained volume growth and better selling prices.

The company’s operating income grew 41 percent to P85.85 billion from last year’s P61.01 billion mainly due to the improved performance of its fuel and oil subsidiary Petron Corp. and sustained recoveries of its food, beverage, packaging and infrastructure businesses.

“Overall, it’s been a very challenging period, with geopolitical conflict resulting in uncertainties and serious supply and costs issues that are affecting industries all over the world. Despite this, and even with the lingering effects of the pandemic, we’re encouraged by the strong and increasing demand for our products and services, as evidenced by our higher volumes and revenues in the first half,” said San Miguel President and CEO Ramon S. Ang.

“This shows that our country’s economic recovery and growth are gaining pace. We will maximize every opportunity to further strengthen our performance in the second half.”

San Miguel Food and Beverage Inc.’s income rose 12 percent to P10.65 billion from last year’s P9.5 billion, driven by volume growth and better selling prices across the Beer, Spirits, and Food divisions. 

Meanwhile, the off-take volumes for SMC Global Power Holdings Corp. reached 14,336 gigawatt hour during the period, up 6 percent from last year.

Consolidated revenues reached P102.6 billion, a 70-percent increase from the previous P60.27 billion driven by improvements in Meralco nominations and higher demand from distribution utilities and contestable customers and the commencement of its 20MW Kabankalan battery energy storage system’s commercial operations.

Operating income, however, declined by 26 percent to P12.76 billion from last year’s P17.15 billion due to the unprecedented increase in fuel input costs and the deration of the Ilijan gas plant due to Malampaya gas field supply issues.

Petron’s income doubled to P7.7 billion from last year’s P3.87 billion as consolidated volumes from its Philippine and Malaysia operations grew 34 percent to 51.4 million barrels on the back of demand recovery due to sustained easing of travel restrictions and the improved pandemic situation. 

Meanwhile, revenues of the company’s infrastructure arm grew 58 percent to P13.4 for the period from the previous P8.48 billion. Operating income more than doubled to P6 billion from the previous P2.31 billion on higher traffic volume.