San Miguel reveals extensive facilities expansion plans to boost production capacity

By Pearly Neo

- Last updated on GMT

San Miguel Food and Beverage (SMFB) will plough resources into building new company-owned production facilities in the Philippines.
San Miguel Food and Beverage (SMFB) will plough resources into building new company-owned production facilities in the Philippines.

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San Miguel Food and Beverage (SMFB) will plough resources into building new company-owned production facilities in the Philippines in an effort to tramp-up production and help boost exports.

SMFB is the new food and beverage arm of San Miguel Corp. (SMC), following SMC’s consolidation of all its food and beverage businesses​ last year.

The company’s plans were announced earlier this month via documents that were provided to investors, as well as the Securities and Exchange Commission as part of a company updates report.

This was submitted after SMFB applied to the commission for approval to sell 20% worth of its shares​, valued around US$ 1.7bn (P90.9 bn). The shares sale is part of SMFB’s attempt to raise US$ 2.67 bn (P142.8bn).

“[SMFB] plans to transition from tolled to company owned facilities to optimize efficiencies and enhance production capabilities,”​ said the company.

Of these, the company’s fresh foods (poultry/pork) and feed segment will see the most infrastructure development. Five new feed mills, carrying 1.5 million tons of capacity, will be built between 2018 and 2020.

Additionally, three processing facilities carrying a capacity of 74 million birds is also planned.

In SMFB’s prepared and packaged food segment, focus will be placed on its value-added meats, dairy, spreads, and biscuits. Four new facilities/lines will be built with a target to raise the total capacity for these by 134,000 metric tons by 2020.

The beer segment will see two new production facilities built to address growing demand and rising costs. SMFB holds 92.7% of beer market share in the Philippines.

Also, an additional 11 million bags of flour will be catered for by the construction of a new flour mill worth US$ 69 mn (P3.7 bn).

SMFB also revealed in the report that it holds 95.3% of gin market share, 47.8% of the butter and spreadable fats market share, and 25.3% for poultry and fresh meats.

From strength to strength

Meanwhile, SMFB also announced US$ 2.56 bn (P137.4 bn) worth of net sales for the first half of 2018 at its latest investors’ briefing, held earlier this month. 46% of its revenue came from food products (fresh and processed), and 45% from its breweries.

It also reported a 5.3% year-on-year growth in revenue, and a 9.3% year-on-year growth in CAPEX.

SMC expressed continuing confidence in company growth in its Project Sapphire offer supplement to investors, dedicating four pages of the report to elaborate on its competitive strengths.

These included broad local exposure, market leading positions, an experienced team and sustainable cash flow.

International goals

SMFB exports its products to roughly 60 countries worldwide. It is setting its sights on new markets in Africa and Europe, in addition to further growth targets in Asia, the Middle East, USA and Australia.

“[SMFB will achieve this via] image-building, volume generating programs and expansion of distribution base,”​ said SMFB.

“[Our] international expansion strategy is to strengthen our position in core markets and drive growth through market expansion via San Miguel brands and local brands,” ​it added.

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