SAN MIGUEL LOOKING TO CONSOLIDATE ITS FOOD GROUP

MANILA, December 2, 2005
 (STAR) Food and beverage giant San Miguel Corp. is looking to consolidate its food business under newly acquired National Foods, according to its president and chief operating officer Ramon S. Ang.

National Foods is the No. 1 dairy manufacturer in Australia, with leading positions in milk, flavored milk, yogurt and specialty cheese. The company was acquired by San Miguel in June 2005.

Ang said yesterday National Foods is on track to deliver good sales and operating profit growth for the year.

"National Foodís year-to-date performance since its consolidation into the San Miguel Group in June represents a strong start, marked by solid top-line growth across its portfolio and earnings that were in keeping with our projected range," said Ang.

"To deliver this kind of performance, despite facing an integration process and margin pressure from higher commodity, energy costs, is a credit to the commitment and execution of the entire National Foodsí organization."

"Thatís a sign of momentum," Ang said. "Our growth targets for National Foods are realistic, and they put us on a path of consistent growth and value creation that can be sustained over time."

Building on this growth, Ang says San Miguel is currently studying ways to consolidate its domestic and regional food business under National Foods.

Already the leading food company in the Philippines, San Miguelís acquisition of National Foods further expands its reach beyond its existing consumer product portfolio basic, processed meats, dairy products and spreads aisles into "better-for-you" food categories including specialty cheese, yogurt, flavored milk and dessert snack foods.

"In the past year we have added capabilities and improved our execution in our Philippine food business, which has lifted our sales growth. We have become more profitable and we are generating significant cash flow," Ang said.

San Miguel also owns an ice cream company with operations in Malaysia and Singapore; a processed foods business in Indonesia and a feeds business in Vietnam.

Ang said the acquisition of National Foods opens new product innovation opportunities across the companyís food businesses in the region and will allow the company to lower procurement costs of basic raw materials for its Philippine- and Malaysian-based dairy businesses.

"Our business portfolio today is broader. The markets where we compete around the Asia-Pacific offer excellent growth opportunities. Our brand positions in Australia, the Philippines, Indonesia and Malaysia are strong and growing," he said.

"And we have ample opportunity to improve our operating margins through increasing scale and ongoing productivity. We continue to pursue the right kind of opportunities to grow our food business consistent with our current strategy."

"Our acquisition of National Foods has made us a major player in the regional food business and positions us for even greater growth in this part of our business," Ang said.

RP mulls oil, gas exploration pact with Indonesia, Malaysia By Donnabelle L. Gatdula The Star 12/02/2005

The Philippines is exploring the possibility of forging an agreement with the governments of Indonesia and Malaysia to conduct oil and gas exploration in the Celebes Sea, Energy Secretary Raphael P.M. Lotilla said.

At the sidelines of the ongoing ASEAN Council on Petroleum (ASCOPE) Conference and Exhibition, Lotilla said this agreement would complement existing similar undertakings with other member nations.

The Department of Energy, through the Philippine National Oil Co. (PNOC), with the governments of Vietnam and China to explore potential oil and gas reserves in the South China Sea including the Spratly Islands.

"One item we talked about was, now that we have a tripartite agreement among Vietnam, China and the Philippines for the South China Sea, in the area again around Celebes Sea there are overlapping continental shares of Indonesia, Malaysia and the Philippines. Indonesia has opened up the possibility of us looking into this overlapping area for oil and gas exploration," Lotilla said.

Lotilla said the talks are preliminary and they have yet to flesh out the details of the possible joint undertaking.

"We donít have the exact area, but thatís below Sipadan and Libitan, which is subject of a dispute between Malaysia, Indonesia and the Philippines Ė thatís where the overlap is. We would have to explore it. In the case of Indonesia and the Philippines, the two governments had initial talks before on maritime boundary delimitation, but those talks have yet to be completed and so this time, the Indonesians raised the possibility to move forward even before the maritime boundaries are ultimately settled," he said.

The energy chief admitted that this effort may entail the threshing out of territorial issues.

"Of course, this is an issue that will have to be taken up through the respective Departments of Foreign Affairs of the two governments. But here we will initially talk about the possibility of a joint oil and gas exploration," he said.

According to Lotilla, the agreement to be signed with Indonesia and Malaysia may vary from that of the agreement with China and Vietnam.

"The terms will not be necessarily similar to the terms we had with China and Vietnam for the joint seismic study," he said.

"In ASEAN, you have more agreements between countries. Indonesia has a joint development agreement with almost everybody except the Philippines. We have Thailand, Indonesia, Malaysia and Vietnam," Lotilla said.

Celebes Sea is a section of the western Pacific Ocean between Sulawesi and the southern Philippines. It is connected to the Java Sea by Makassar Strait.


Chief News Editor: Sol Jose Vanzi

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