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San Miguel to spend P700 billion in next 5-7 years

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By Arra B. Francia, Reporter

DIVERSIFIED conglomerate San Miguel Corp. (SMC) is spending around P700 billion in the next five to seven years to further grow its infrastructure, fuel and oil, food and beverage, and power businesses.

“Roughly about P700 billion in the next five to seven years. That does not include the new airport project that is being evaluated by the government today along Manila Bay in Bulacan province,” SMC Chief Financial Officer and Senior Vice-President Fernando K. Constantino said during an institutional investors’ briefing for its P30-billion bond offering in Makati City late Tuesday.

This capex program has been in place since 2015, Mr. Constantino told reporters after the briefing.

Included in the capex program is an allocation of P56 billion to P60 billion for the food business in the next three years. The beer segment will also corner a large pie of the spending program as it builds two new breweries in the next two to three years.

The construction of big ticket projects such as Boracay airport, the Stage 3 connector road, C-6 expressway that will connect Taguig City to Quezon City, the Metro Rail Transit Line-7, and bulk water project in Bulacan, will be accounted for in the capital spending budget.

For its power business, Mr. Constantino said 300 megawatts (MW) is now on stream, while 700 MW will be completed in the following years.

SMC Senior Vice-President and Head of Treasury Sergio G. Edeza cited various strategies when asked how the company looks to raise funds for the capex.

“It can be in different forms, it can be bonds, it can be notes. All the avenues available to us,” Mr. Edeza said, with Mr. Constantino adding it can be internally generated, given SMC’s healthy cash flow.

In a presentation to investors, Mr. Constantino said the company will grow the food business so that it will account for 21% of revenues by 2020, from a 16% contribution in 2016.

Petron Corp. is expected to continue to contribute bulk of revenues at 44%, although lower than the 49% recorded in 2016.

The beverage segment will remain at a level of 17%, same as power with 11%. The infrastructure business will contribute 4% by 2020 from 3% in 2016, while packaging will account for 3%, against its previous level of 4%.

Meanwhile, the company is currently raising P20 billion in a fixed rate bond offering this March, with an overallotment option of up to P10 billion to repay its existing obligations. The company has tapped seven large banks to manage the offer, namely Standard Chartered Bank, BDO Capital and Investment Corp., BPI Capital Corp., China Bank Capital Corp., First Metro Investments Corp., ING Bank, and SB Capital Investment Corp.

The conglomerate recorded a net income attributable to the parent of P20.9 billion in the January to September 2017 period, 19% lower than the same period in 2016, amid a 19% uptick in revenues to P596.9 billion.

Shares in SMC picked up 2.72% or P3.90 to finish at P147.40 apiece at the Philippine Stock Exchange on Wednesday.