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Asia300

San Miguel lifts recurring profit 11%, driven by food and fuel

Philippine conglomerate's diversification pays off

A storekeeper displays San Mig Light beer, a product of San Miguel Brewery in Manila.   © Reuters

MANILA -- San Miguel, the Philippines' largest listed company by sales, boosted recurring profit 11% to 54.7 billion pesos ($1.05 billion) in 2017, while consolidated revenues surged 21% to 826 billion pesos, the company said Thursday.

Recurring profit excludes extraordinary items and foreign exchange conversions, which historically erode -- although on paper -- the company's earnings, due to its sizable dollar-denominated liabilities.

San Miguel, the company behind the beer of the same name, expanded into a wide array of industries a decade ago and the 2017 results suggest the diversification is paying off.

Fuel unit Petron's income increased 30% to 14.1 billion pesos on stronger local and Malaysian operations. Consolidated revenues expanded by 26% to 434.6 billion pesos, making it the conglomerate's single largest revenue driver.

Net profit at San Miguel's power unit, which runs coal-fired power plants, nearly doubled to 8.2 billion pesos on lower foreign exchange losses. The company recently won local antitrust authorities' approval to acquire coal power plants jointly owned by U.S.'s AES and Thailand's EGCO Group. The facilities, located in Luzon island and with capacity of around 1,000 megawatts, were acquired in a $1.9 billion deal, one of the largest in the local sector.

San Miguel has also ventured into transport infrastructure, mainly domestic tollways, but Thursday's press statement did not disclose the bottom-line for that business.

Net income at San Miguel Brewery rose 17% to 20.7 billion pesos, on revenues 17% higher at 113.3 billion pesos, boosted by better marketing. The liquor unit reported 67% net income growth to 602 million pesos.

San Miguel Pure Foods registered 16% net profit growth to 6.9 billion pesos, as poultry products drove sales, which grew 5%.

San Miguel is consolidating its beer, liquor and food units under San Miguel Pure Foods. The merged company, which will be renamed San Miguel Food and Beverage, is expected to become one of the region's largest in the sector.

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