San Miguel Philippines profits boost HK sales

San Miguel’s Philippine brewery has reported a 10% growth in the first half of this year in its domestic sales, despite reporting losses from its Hong Kong and China operations.

In a statement, San Miguel Brewery (SMB) said it increased its net profit to P6.9 billion (US$151.4m) during the period from P6.3bn (US136.2m) a year ago, as revenues went up by five percent to P39.8bn (US$865m) from P37.7bn (US$815.5M) in 2014.

SMB would have posted a better performance if not for San Miguel Brewery Hong Kong Limited (SMBHK), which posted a net loss attributable to equity shareholders of HK$14.6m (US$1.9m) according to a regulatory filing in the Hong Kong Stock Exchange.

The reported losses, a significant turnaround from last year’s net profit of HK$21m (US$2.7m), were due to registered volume losses due to the non-renewal of distribution agreements with American brewer Anheuser-Busch, the maker of Budweiser, which accounted for a quarter of SMBHK’s total turnover in 2013.

SMBHK, which has operations in China and Hong Kong, issued a profit warning last month that earnings took a hit in the first semester after its 15-year old distribution deal with Anheuser-Busch had expired.

Compounding the losses were operating costs associated with the sales and marketing operations of those products covered by the distribution deal, SMBHK said. SMBHK is majority owned by San Miguel Brewing International Ltd., a wholly owned unit of the Philippine brewer.

Established in 1890 in Manila, SMB is one of the leading brewers in Asia with strong positions in the Philippines and Hong Kong as well as operations in China, Indonesia, Thailand and Vietnam.