SMC incurs P4-B H1 loss due to lockdown

Published August 6, 2020, 7:42 PM

by James A. Loyola

Diversified conglomerate San Miguel Corporation (SMC) reported a net loss of P4 billion for the first half of 2020 from a P26.59 billion profit in the same period last year due to the lockdown and alcohol ban during imposed to curb the spread of the COVID-19 pandemic.

 In a statement, SMC said consolidated revenues amounted to P352.8 billion, 31 percent lower from last year while consolidated operating income declined by 74 percent at P14.9 billion.

However, SMC reported a rebound in its businesses by the end of the second quarter of 2020 as it continues to respond nimbly to the new normal, through an agile operating model built around consumers along with the reinforcement of its culture of “malasakit” (caring).

With the recent reimposition of restrictions, the company said it is prepared to execute on its plans and support government initiatives to the fullest to help the country recover. 

“The first half was particularly challenging for most in the business sector but we are seeing strong indications of a recovery for SMC businesses, and we remain focused and determined to build on these gains,” SMC president and COO Ramon S. Ang said.

He noted that, “Government reopening the economy, and allowing businesses to operate under strict health and safety protocols, was a very good call. Given that we’re still in a pandemic, saving lives is still our priority. As such, we fully support the new Modified Enhanced Community Quarantine (MECQ) in support of our medical front liners.”  

While most of SMC’s businesses managed to weather the storm caused by COVID-19, two of its subsidiaries were particularly hit the hardest – San Miguel Brewery Inc. and Petron Corporation. 

The implementation of the Enhanced Community Quarantine (ECQ) in mid-March did not help SMB’s operations which was already reeling from the effects of higher excise taxes.

Consolidated revenues as a result dropped 39 percent to P42.8 billion. Operating income slid 61 percent to P7.4 billion, compared to the same period last year.  

With the easing of restrictions from ECQ to General Community Quarantine (GCQ) and the gradual reopening of the economy, San Miguel Brewery’s domestic operations’ performance picked up by mid-May with significant beer volume recovery in June.

Petron, meanwhile, continued to face difficulties throughout the first six months of the year, as global crude prices remained volatile. This was compounded by the decline in demand during the second quarter when the ECQ was in place. Refining margins also remained weak in the region as oil consumption declined.

While Petron suffered inventory losses of nearly P15 billion during this period, the recent stability in crude prices in July is seen to provide an estimated P3.5 billion in inventory gain for the company by the second half of the year. “The best thing we can do is to work hard to continue providing essential goods and services to our people, while adjusting our operations to fully adhere to the quarantine. We are fortunate that during the easing of the quarantine, we were able to put in place and strengthen strategies that will help us operate better, get our products and services to more customers, support long-term growth, and help boost our economy during these challenging times,” Ang said.