SMB retains triple-A rating as it adapts to pandemic

Published June 17, 2021, 3:22 PM

by James A. Loyola

San Miguel Brewery Inc. continues to enjoy a triple-A rating, for its P9.54 billion outstanding bonds, from Philippine Rating Services Corporation (PhilRatings).

PhilRatings said it has maintained its highest issue credit rating of PRS Aaa, with a Stable Outlook, for SMB’s bonds with the following tranches: Series F worth P7.00 billion, maturing in 2022, and Series H worth P2.54 billion, maturing in 2024.

Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong. A Stable Outlook means the rating is likely to remain unchanged in the next 12 months.

PhilRatings said the ratings considered SMB’s sustained track record of generating a significant amount of cash from operations, relative to debt servicing and other capital expenditure requirements.

It also noted the Company’s ample financial flexibility and conservative capitalization as well as its leading market position and well-received products in the country, with a long history of sustaining significant competitive advantages over current competitors and enhanced further by the industry’s high barriers to entry for prospective players.

Also factored into the rating is SMB’s experienced management and production team, with realized synergies from San Miguel Food and Beverage, Inc. (SMFB) and support from Kirin Holdings Co., Ltd. (Kirin; the Kirin Group).

SMB has seven production facilities strategically located across the country. It also operates one brewery each in Hongkong, Indonesia, Vietnam, Thailand and China.

PhilRatings said SMB was able to quickly adapt amid the pandemic-related quarantine restrictions and implemented the necessary pivots, which included modified selling strategies and more direct-to-consumer options.

To further expand distribution and to tap emerging segments such as the home market and online consumers, SMB operated a delivery service in Metro Manila and selected key cities.

Even before the pandemic, SMB has already established its own online platform, SMB Delivers, a delivery service which offers the convenience of serving SMB products to select subdivisions and condominiums in key cities nationwide (i.e. in Metro Manila and Cebu).