The Market Monitor Minding the Nation's Business
By Jerry Maglunog
Asian conglomerate San Miguel Corp. (SMC) has identified power and cement as its major growth drivers in the growing Philippine economy. SMC President Ramon S. Ang said SMC is spending $800 million to build two new cement plants in Pangasinan and Quezon.
Construction of the Northern Cement plant in Pangasinan is ongoing and is scheduled for completion in June 2017; the second cement plant will be ready in September of the same year. Ang said that, although SMC is awash with cash, only 50 percent of the expenses would be equity; the rest would be loan. Ang also said SMC may put up a 900-megawatt (MW) coal-fired power plant in the Visayas, possibly in Leyte.
Two more similar projects are also planned in Limay, Bataan; and Malita, Davao—to be completed by 2016 and 2017, respectively. The Limay plant will have a capacity of 600 MW; that in Malita will have a 300-MW capacity.
The firm’s power unit—SMC Consolidated Power—has already started construction of the Bataan power project and tapped Formosa Heavy Industries as its engineering, procurement and construction contractor. Petron, the country’s leading oil refining and marketing company, is also set to further expand overseas.
ln 2012 it acquired ExxonMobil’s downstream business in Malaysia.
“We are looking at a possible overseas acquisitions, but we are being careful,” Ang said in an interview. Petron’s financial performance is improving; it posted a P3-billion net income in the first quarter.
SMC’s diversification to heavy industries is considered a logical step for the company, which had built its reputation in the food business.
Petron remains SMC’s main bread and butter, based on the margins it makes.
In 2013, Petron posted profits of P5.1 billion ($113.46 million), 186 percent higher than in 2012.
As for its Philippine Stock Exchange (PSE) listing, the issue was oversubscribed, attributed to the favorable reception of the investment community.
Petron previously disclosed that proceeds of the offering would be used to redeem the P10-billion ($222.47-million) preferred shares it issued in 2010.
SMC is Southeast Asia’s largest publicly listed food, beverage and packaging company, as well as the Philippines’ largest corporation in terms of revenue, with over 17,000 employees in over 100 major facilities throughout the Asia-Pacific region.
Its flagship product, San Miguel Beer, is one of the largest-selling beers and among the 10 top-selling beer brands in the world.
San Miguel’s manufacturing operations extend beyond its home market to Hong Kong, China, Indonesia, Vietnam, Thailand, Malaysia and Australia; its products are exported to 60 markets around the world.
Since 2008, SMC has ventured beyond its core businesses, becoming involved in fuel and oil, power generation and infrastructure. It was briefly involved in Philippine Airlines from April 2012 to September 2014.