San Miguel Corp.’s new businesses, power and gas, will propel revenues to P1 trillion in four years, double last year’s P535 billion, Eduardo Cojuangco Jr. chairman told stockholders in its annual meeting.
By 2015, he said infrastructure projects will begin generating significant cash flows.
Newly bought Philippine Airlines and subsidiary Air Philippines will be reconfigured to bring down operating costs, make them different from other airlines and repositioned to compete in the burgeoning industry.
San Miguel will also venture into broadcasting, another growth area. It will bid for government-owned broadcasting companies.
“By 2015, the upgrade of Petron’s Bataan refinery will be completed and will result in greater efficiencies, then will shift toward more profitable value-added products and better margins,” he added.
Cojuangco said the company’s strong balance sheet — a debt to EBITDA ratio of just 2.14 percent by end 2011 — allows San Miguel further space to “pursue additional investments.”
“We have already identified potential investments related to our existing businesses, chief among them the power sector, mining, and the oil and gas segments,” said Cojuangco.
Ramon S. Ang, San Miguel president, said broadcasting is among the ventures the company is looking at, with some offers being considered.
Cojuangco said San Miguel is currently focused on turning around PAL and Air Philippines, where the company holds a 49 percent stake.
“Philippine Airlines and Air Philippines, is the focus of a good deal of our current efforts, much like Petron was two or three years ago. With so many alternatives open to travelers today — no frills, budget airlines, many more carriers opening new and more frequently traveled routes — the airline industry is easily commoditized. The immediate task at hand, after putting in place an efficiency plan that will lower operating costs, is to differentiate and reposition PAL,” he said.
San Miguel at the same time is working to further strengthen its traditional food businesses, recently adding bottling lines and putting up a new bottling plant for the beverage business.
San Miguel is likewise in the process of constructing its grains terminal and has upgraded the production lines for its processed meats.
“To maximize and extract even greater efficiencies, we have implemented the refurbishing and development of Petron’s RMP-2 and are evaluating the viability of refleeting PAL,” said Cojuangco.
“We believe that San Miguel’s long-term value rests on fulfilling a social purpose. The unique portfolio of businesses we manage today will set up for the future — and perhaps even leave the country and our countrymen a little better off in the process,” Cojuangco said.
Shareholders yesterday approved the proposal to increase capitalization of San Miguel to P33 billion from P22.5 billion through the creation of 1.1 billion “Series 2” preferred shares at P5 par value. The newly created preferred shares will be used to refinance the redemption of the P72 billion preferred shares the company issued in 2009 in exchange for common shares, including that of the government’s interest, to allay concern about the company’s diversification plans.
On Thursday, San Miguel was reported to be planning to raise P80 billion from these preferred shares, which Ang said may me be done through either a single issuance or in tranches.
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