The Philippines: San Miguel Food and Beverage expects to perform well in Q4

Listed San Miguel Food and Beverage Inc. (SMFB) expects to perform well in the last three months of 2018 on the back of a projected sales increase during the Christmas season.

The “fourth quarter is normally good for us,” SMFB Chief Operating Officer Francisco Alejo told reporters earlier this week. “For the total [sales of each year], about 27 to 30 percent are [contributed during] the fourth quarter.”

According to him, demand for the San Miguel food-and-drink unit’s products, such as ham and queso de bola, are predicted to rise and contribute a significant share in sales.

Alejo admitted that SMFB faced challenges during the third quarter due to the higher prices of raw materials, such as corn, hydrogenated milk fat and wheat.

“[For] corn, about 500,000 metric tons were unavailable, so we had to import corn, and corn [prices] globally are increasing,” he said.

His statement came as SMFB said it would spend P41 billion to expand the production capacity of its businesses.

The firm plans to spend P10 billion for the next three years, including this year, to build manufacturing facilities for beer, animal feeds and flour, as well as venture into the ready-to-eat business.

This excludes, however, capital expenditures for two breweries being built, one in Santa Rosa City in Laguna province and the other in Northern Mindanao. Each is expected to produce 2 million hectoliters of beer annually once they begin commercial operations by late 2019 and early 2020, respectively.

SMFB is also planning to construct five more feed mills, two of which are expected to start production this year and the rest in 2019.

Alejo said his company was also building poultry facilities in the next two years to “take care of the increasing per-capita consumption of chicken in the Philippines” and “slaughterhouses for our hog business under the Monterey brand.”

The firm also plants to increase the capacity of its flour mills by 72 percent after attaining 100-percent utilization.

“We’re not even very strong in the Visayas and Mindanao, so there’s a lot of opportunity for growing our business in that part of the country,” the official said.

Processed food, such as hotdogs and canned food, are also set for growth after the company achieved half of its target expanded volume. The remainder is expected to be reach next year.

The company is venturing into the ready-to-eat business with a P2.4-billion plant in Sta. Rosa capable of producing meat products, baked bread, and mix ingredients. Construction of this facility is expected to begin by the second half of 2019.

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