The second quarter marked the first half of the year for different companies. The same applies to San Miguel Corporation (SMC), the well-known conglomerate company that’s now paving its way to be as diversified as it can be. During the first half of 2019, the firm reported a decline billion. This is much lower compared to the P27.59 billion net income it posted last year during the same period. This followed an increase in net sales, which is 2% or equivalent to P509.5 billion. Every drop or grow in profit has a story behind. Let’s see what affected SMC’s earning for the 2 quarters that have passed.
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The drop in net income of SMC can be attributed to the flat revenue and sluggish performance of Petron Corporation. The firm noted that Petron weighed by weak refining margins and prevailing movements in the prices of crude oil in the world. The consolidated operating income went down by 14% or P57.6 billion because of this. Petron’s net income dropped by 72% or P2.62 billion and net sales by 7% to P254.81 billion because of the closure of its Bataan refinery that is set for maintenance and major repairs after the earthquake that hit the province last April 2019. Petron is considered as a huge contributor to the slow performance of SMC after 2 quarters.
Aside from Petron Corp., it can also be noted that some of the business segments of SMC recorded a drop in their profit. San Miguel Food and Beverage (SMFB) reported a growth in net sales, which is 10% to P151.11 billion but because the business incurred higher costs, the net income was dragged by 5% to P14.67 billion. The food business of SMC, the San Miguel Pure Foods, has a decrease in net income by 85% to P447 million although the sales were up by 5% or P66.13 billion. While it is a challenging track for SMC’s food and oil segments, Ginebra San Miguel Inc. and San Miguel Brewery, Inc. helped counterbalance the slow growth as it noted a 94% and 12% climbed in net income or P980 million and P13.26 billion respectively.
Meanwhile, the power business of SMC, through SMC Global Power Holdings, recorded a 288% increase in earnings or equivalent to P7.26 billion. The consolidated off-take volume jumped by 28% to 14,635 gigawatt-hours. This is primarily because of the new bilateral contracts from the extra power made by Limay, Malita, and Masinloc power plants and improved plant capacity in Ilijan, and Sual. The infrastructure business, on the other hand, marked a slide in its operating income by 3% or P6.03 billion in figures. This was amide the recorded flat sales of P12.32 billion. The vehicular traffic volume became better by 6% across its toll roads in TPLEX, SLEX, and Metro Manila Skyway.