SMC, SMIC Phl growth drivers

The Philippines’ two largest conglomerates are powering the country’s robust economic growth this year and in the coming years.

Having demonstrated unprecedented expansion in the past 25 years, both San Miguel Corp. and SM Investments Corp. (SMIC) are defining the economy’s growth trajectory and strategies of the next quarter century.

SMC is banking on massive industrialization – heavy investments in infrastructure, energy, industrial plants and consumer goods to generate the double-digit growth it needs to maintain its market dominance and exploit its first mover advantage in a number of growth areas. San Miguel’s slogan is – “Your World Made Better.”

For its part, SMIC is banking on consumption (which accounts for 84 percent of GDP on the spending side) – and calibrated diversification into new growth sectors to remain dominant in businesses it knows best – retailing, property, banking and savvy portfolio investments. SM Group’s slogan is — “We’ve Got It All for You.”

San Miguel is the biggest conglomerate in terms of assets (P2.459 trillion), revenues (P1.5 trillion) and diversity of businesses. About six percent of Philippine GDP is produced by SMC alone.

Under president and CEO Ramon S. Ang, SMC is No. 1 in at least ten businesses – food manufacturing (Purefoods), beer and beverages (SanMig), power generation, tollways, cement, airports, petroleum oil refining and marketing (Petron) and super luxury cars (BMW and Ferrari). SMC has more than 100 industrial plants in the Philippines and the rest of Asia.

SMC reported strong full-year profits for 2023, with a 67 percent gain in consolidated net income to P44.7 billion.

The huge profit jump was driven by significant volume growth across its key businesses, including San Miguel Brewery Inc., Ginebra San Miguel Inc., Petron and SMC Infrastructure, together with the integration of Eagle Cement Corp.’s financial results.

SMC’s strategic focus on operational efficiencies and sustainability initiatives contributed to a 24 percent increase in EBITDA to P205.3 billion and a 34 percent rise in consolidated operating income to P144.5 billion.

“We had a strong finish in 2023,” gushes Ang, SMC’s vice chairman since 1999 and president since 2002. Between 1998 and 2023, SMC revenues swelled from P78 billion to P1.5 trillion, a growth per year of 70 percent, the fastest by any local company.

RSA is the visionary behind the conglomerate’s frenetic growth of the past 25 years. He sees strong financial performance as SMC’s major investments pay off.

SMC banks on massive industrialization to push its growth and that of the economy.

Its P735-billion ($13-billion) San Miguel Aerocity in Bulacan is the single largest investment ever by any company, foreign or local, in the country.

With three airports – NAIA, Boracay, and Bulacan – SMC will service 90 percent of arrivals and departures. In five years, with a better NAIA, tourism arrivals will swell to over 30 million passengers per year, from the present five. Tourism’s share of GDP will quadruple, from five, to 22 percent per year.

SMIC is No. 1 in market capitalization (P1.167 trillion), profits (P106.185 billion), banking (BDO and Chinabank with combined 2,368 branches), bank profits (P95.4 billion, P73.4 billion BDO, P22 billion Chinabank), retail (3,853 stores, including 85 malls and 419 stores opened in 2023 alone) and property development – 85 malls, 67 primary residences, 22 lifestyle cities, 18 office buildings, 10 hotels, six convention centers and one arena, as of end-2023.

In 2023, the SM Group chalked up revenues of P616.3 billion and profits of P106 billion (P77 billion went to parent SMIC). With over P100 billion in profits, SM Group is the Philippines’ most profitable private company. The group’s banks delivered most of the profits – P73.4 billion by BDO and P22 billion by Chinabank. Since BDO is 45.3 percent owned by SMIC, only P33.25 billion was credited to SMIC. Since Chinabank is owned 22.5 percent by SMIC, only P4.95-billion CBC net was credited to SMIC. Total banks that went to SMIC in 2023: P38.2 billion profits, 50 percent of the mother firm’s profits.

The SM Group is more of a banking cash machine than a retailing chain. No wonder the Sy siblings together are the country’s richest family.

At end-2023, the richest family groups in the Philippines, based on the market value of their listed holding companies are: 1) SMIC $21.6 billion; 2) Golden MV Holdings (Villar) $11.6 billion; 3) Ayala Corp. $7.4 billion; 4) JG Summit (Gokongwei) $5.4 billion; 5) Aboitiz Equity $4.9 billion; 6) San Miguel $4.8 billion; 7) DMCI (Consunji) $2.7 billion; 8) LT Group (Lucio Tan) $1.9 billion and 9) Alliance Global (Andrew Tan) $1.7 billion.

“Our focus is on responsible growth,” says Teresita Sy-Coson, vice chair of SMIC and the matriarch in the conglomerate run by the six siblings of the late legendary taipan Henry Sy Sr. who died in 2019 at the age of 94.

The SM Group’s growth has banked largely on consumption which today contributes up to 84 percent of total value of the GDP.

“SM Investments Corp. (SMIC), the parent company of the SM Group, continues to see potential for regional development and targeted high growth sectors,” says SMIC. This strategic direction is aligned with the SM Group’s commitment to foster sustainable economic advancement and lasting impact in areas and communities outside of the National Capital Region (NCR).

SM’s three largest companies, SM Investments Corp., SM Prime Holdings, and BDO, comprise 33 percent of the value of the Philippine Index.

* * * I mourn the passing of a great friend, the Harvard Law (Masters)-educated Rene Augusto Verceluz Saguisag, senator (1987-1992) and human rights lawyer. Born Aug. 14, 1939, he died on April 24, 2024. RAV’s pro-people and pro-bono work so inspired my daughter, Ivy Lopez, an Ateneo juris doctor law graduate, her first job choice was being a pro bono lawyer, with Rene’s law firm.