Philippines: San Miguel Corp, Southeast Asia's largest food and drinks group, is set to post weaker third-quarter profits as problems in its poultry and soft drinks businesses offset strong beer sales, analysts said. The company also faces a tough 2005 with a 20 % increase in taxes on alcohol, expected be approved by congress, set to hit beer sales. Two analysts forecast San Miguel, which makes 9 out of every 10 beers sold in the country, would post net income of 1.0 billion pesos ($18 billion) in the third quarter against 1.79 billion pesos a year earlier. A third analyst said third-quarter net profit of 2.1 billion pesos, Reuters revealed on November 3.

The company, owned 15 % by Japan's Kirin Brewery Co. Ltd. , is due to release its results on Thursday. It already said that profit in July and August reached 760 million pesos. "Third quarter is usually a weak quarter," said Alex Pomento, research head of Macquarie Securities (Philippines) Inc., who expected earnings of 1.0 billion pesos. "But strong numbers are coming from the beer business. Surprisingly, even after election-related spending died down, it was still showing double-digit sales growth, possibly due to higher farm income," he said.

Beer sales volume rose 16 % against the same period a year earlier, with beer revenue up 20 percent. International beer sales volume for the first eight months was 13 percent higher from a year ago.

San Miguel said profits rose 28 percent in the first eight months of the year as spending related to May national elections lifted local beer sales. Analysts polled by Reuters Estimates gave a consensus net income forecast for San Miguel of 8.8 billion pesos this year, up from an estimate of 8.66 billion pesos in August. The group posted net income of 7.4 billion pesos in 2003.

San Miguel's B shares open to all investors lost 4.1 percent in the third quarter to 70.50 pesos while the main index climbed 11.5 percent. Its A shares exclusive to local players were steady at 57.50 pesos. San Miguel A shares were unchanged at 57 pesos while B shares were up 0.69 percent at 72.50 by 0436 GMT on Wednesday while the main index was up 0.98 percent. The B shares have risen more than 13 percent so far this year, compared with a 4.6 percent rise for the A shares. ($1=56.3 pesos)

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