SMC outlook Still positive

PARENT firm Top Frontier Investment Holdings Inc. maintained its positive outlook for San Miguel Corporation even as it hailed the conglomerate’s initiatives to help the country’s economy recover from the effects of the Covid-19 pandemic. Top Frontier, in a statement following its annual stockholders meeting yesterday, said that while the quarantine has slowed down SMC’s growth momentum, the company is primed to recover lost ground in the coming months, and help boost the economy, with strategies in place to adapt to the new business environment. “As we transition to our next normal, I am confident that San Miguel Corporation will recover its footing sooner than expected,” Top Frontier Holdings Inc. chairman Inigo Zobel said. Earlier, SMC president and chief operation officer Ramon S. Ang said that, in order to stimulate and help boost the Philippine economy in this critical time, SMC would continue to invest in growth-creating and jobgenerating projects--including its ongoing capacity expansion and infrastructure development initiatives. At its stockholders meeting last week, SMC also touted measures the company has put in place to adjust to the changing operating environment. These include: making supply chains more resilient, updating operating and selling models, keeping its cost base appropriate and manageable; increasing efficiencies and rationalizing spending, and protecting its cash flows and pro-actively managing its working capital. Top Frontier also praised SMC’s initiatives to help the country during the pandemic, including the recent inauguration of its Better World Edsa COVID-19 PCR testing laboratory. The facility can process 4,000 tests daily,

expandable to 12,000. It aims to handle testing for some 70,000 employees and extended workers in SMC’s nationwide network, and boost the country’s overall testing capacity. It is just the latest of many COVID-19 response initiatives from SMC. SMC has spent over P13 billion in assistance to the country, a package that includes food donations to vulnerable communities, disinfectant alcohol to health facilities, medical equipment and personal protective equipment (PPE), free toll and fuel for medical health workers, emergency quarantine facilities, assistance to the agriculture sector, advance tax and other payments to government, and continuing compensation for its workforce. Top Frontier reported consolidated revenues of P1.02 trillion, reflecting strong revenues from most of SMC’s major businesses for 2019. Its Beer, Spirits and Power businesses performed very well to end the year with a consolidated EBITDA of P160.3 billion and consolidated net income of P48.6 billion, 3% and 8% higher than in 2018, respectively. Petron’s revenue contribution was affected by challenges facing the oil industry and almost all refiners globally. Meanwhile, San Miguel Foods was hit by volatile input costs and supply glut in poultry which pushed down poultry prices to unprecedented lows along with the African Swine Fever that also adversely affected hog and feed volumes. However, San Miguel Foods sees a marked improvement in the first quarter of 2020. SMC started strong in the first two months of 2020 as its Food and Beverage business grew revenues by 7% and the Packaging business by 8%. The Power business posted volume growth in the same period but was offset by weaker prices amid increasing competition. However, the disruptions resulting from the lockdown in Luzon and much of the Philippines that started last March 16 adversely affected SMC’s, and Top Frontier’s, total first-quarter 2020 performance.