June 6, 2012

 

San Miguel Pure Foods may acquire more food firms

 

 

San Miguel Pure Foods Co., Inc. is keen on buying more food brands using proceeds from a possible share sale this year.

 

According to SMC president Ramon S. Ang, the company is doing well cash-wise, thus the search for possible acquisition and the expansion of San Miguel Pure Foods will be have to be concentrated on food.

 

Some of these planned acquisitions had been earlier deferred by the company and were supposed to be partly financed by a PHP15 billion (US$347.38 million) war chest raised from San Miguel Pure Foods' preferred share sale last year, but the purchases did not materialize.

 

San Miguel Pure Foods, the company behind the Monterey, Dari-Crème and B-Meg brands, had said it was mulling a share sale this year to comply with the minimum public float imposed by the Philippine Stock Exchange (PSE).

 

Recent PSE data puts San Miguel Pure Foods' free float level at a mere 0.1%, well below the required minimum of 10%. The company's executives said they will try to sell 10% to 15% of their common shares by the end of 2012.

 

However, the company has yet to decide whether it will pursue a public sale or a private placement among investors.

 

Listed financial services firm Maybank ATR Kim Eng Financial Corp., along with other still-undisclosed financial institutions, will assist San Miguel Pure Foods in the planned transaction and determine the adequate valuation of the company's shares.

 

San Miguel Pure Foods was incorporated in 1956 to make and market processed meat products.

 

It has since then diversified into poultry and livestock operations, feeds and flour milling, dairy and coffee production and franchising.

 

This year, the firm said it will be allotting PHP4 billion (US$92.63 million)for capital expenditures to finance the initial construction of a new supply depot and the expansion of its chicken nuggets production line.

 

The new supply terminal, located in Mabini, Batangas, is seen to lower operating costs and stimulate revenue growth in the long term by accommodating larger freight vessels. It is expected to come on stream in the third quarter of 2013, earlier reports stated.

 

San Miguel Pure Foods saw its first-quarter net income drop by 46.53% to PHP569.96 million (US$13.20 million) from PHP1.07 billion (US$23.32 million) last year, due to the profit declines in a number of its subsidiaries.
 

Revenues fell by 8.79% to PHP22.40 billion (US$518.78 million) from PHP20.59 billion (US$476.95 million) in the same period last year, while sales costs grew by 13.98% to PHP19 billion (US$440.12 million) versus PHP16.67 billion (US$386.14 million), year on year

 

The company's shares were last traded on Feb. 15 at PHP1,010 (US$23.39) apiece.