MANILA, September 4, 2003  (STAR) By Marianne V. Go  - San Miguel Corp. (SMC), Southeast Asia’s largest food and beverage conglomerate, plans to invest up to $700 million in seven food and beverage businesses in China and other Asia-Pacific countries, chairman and chief executive officer (CEO) Eduardo Cojuangco said yesterday.

SMC will sign agreements soon to establish food and beverage complexes in these areas, he said without naming the other parties.

Cojuangco had said earlier that a San Miguel "food and beverage complex" would also be set up in Australia, Indonesia, Malaysia, Taiwan, Thailand and Vietnam.

"Ultimately, each (market) will have $100 million (in investments by San Miguel)," he said.

San Miguel’s annual group revenue should be boosted by $300 million from sales generated in these markets.

Cojuangco also said that San Miguel is likely to meet its P7 billion net profit target for 2003, up from P6.63 billion in 2002, when the company booked a restructuring cost of P837 million.

"I think we will be able to hit our P7 billion net profit target this year," Cojuangco told reporters after delivering a speech at a joint meeting of the Canadian, European and Japanese chambers of commerce.

Cojuangco said San Miguel’s sales are likely to improve in the second half but did not elaborate.

San Miguel’s net profit for the three months to June fell 10 percent from a year earlier to P1.709 billion as the Severe Acute Respiratory Syndrome (SARS) viral outbreak limited beer sales in Hong Kong and China.

First half to June net profit rose two percent to P3.05 billion, with net sales SMC to growing nine percent to P72.16 billion.

Cojuangco said profit prospects for the rest of the year looked brighter but hinged on "how the peso depreciates". The company imports malt and barley for brewing beer.

The peso fell dangerously close to its record low of 55.75 to the dollar last week due to political worries following the July 27 mutiny by junior soldiers, graft accusations by a senator against President Arroyo’s husband, and a court ruling suspending the central bank governor over the closure of a medium-sized bank.

San Miguel previously said it wanted to expand in seven Asian countries this year to propel growth as it faces saturation in the local market, where it dominates the beer, liquor, soft drink and food sectors.

The company, 15 percent owned by Japan’s number two brewer Kirin Brewery Co Ltd., operates breweries and packaging plants in Vietnam, Indonesia and China and a brewery in Australia.

San Miguel is also eyeing acquisitions in the region. It has confirmed that it was in talks with Malaysia’s diversified Lion Corp., which has breweries in China.

Cojuangco also said the government’s decision to increase the excise tax on fermented liquor will result in an increase in San Miguel beer prices.

Cojuangco said with the new excise tax, about half of San Miguel beer’s selling price is already comprised of tax.

"And of the 50 percent that goes to SMC, it must be plowed back as capital and must also account for profit," Cojuangco said, adding that, "we have to pass it on to our consumers, if our consumers can’t afford it, they will drink less."

The SMC chief admitted that SMC cannot afford to absorb the additional tax.

"We cannot afford to absorb the increase everytime, so it’s a worry," Cojuangco said. —- With AFP, Reuters

Reported by: Sol Jose Vanzi

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