Updated 08:35 AM PHT Wed, March 22, 2017
Metro Manila (CNN Philippines) — Diversified conglomerate San Miguel Corporation (SMC) expects yet another stellar performance this year to be driven largely by its fuel business.
"I think for year 2017, I think Petron will be able to deliver the most," SMC President and Chief Operating Officer Ramon Ang told CNN Philippines Senior Anchor Pinky Webb.
Ang said Petron Corporation will build a new refinery worth $15 billion (₱750 billion). The planned 250,000-barrel-a-day facility will be completed in three years.
"I think 2017, we will be able to realize all the expansion, all the hard work we have put into Petron. Petron is now going to give us the full potential. With full potential, Petron free cash flow should be about $800 million, net income maybe about 25 billion net income peso per year," he said.
He said SMC's biggest gain in 2016 came from Petron, which hiked its net income by 73 percent to ₱10.8 billion from ₱6.2 billion in 2015, thanks to record sales volumes.
Aside from Petron's projected significant growth, expansion this year will also come from SMC's tollways and food manufacturing businesses.
Ang said he expects SMC to hit a net income of ₱60 billion this year, or 15 percent higher from ₱52 billion last year.
"I think to be very conservative, we should be hitting at least 60 billion net income. Now, we are lucky we should be able to get much more from our tollway and from our food business and from our power business. Because that 60 billion, I'm just projecting power to contribute about 4 billion a year. (Which is conservative?) Very conservative," Ang said.
SMC's net income grew 80 percent in 2016 driven by higher revenues across major businesses, mostly delivering double-digit income growth.
Last year, SMC sold its telco assets to Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom, Inc. for about ₱70 billion.
He added San Miguel Brewery may achieve a net income of up to ₱25 billion from ₱17.6 billion last year. SMC's beverage unit was the biggest profit contributor last year.
On food manufacturing, Ang sees a three-fold spike in San Miguel Pure Foods' capacity. The company's net income rose 26 percent year-on-year to ₱6 billion last year.
"Our food business also did very well, about 30 percent better income. So I think our infrastructure did very well, our power business also did very well, and I'm very confident that net performance will be repeated this year 2017," Ang said.
San Miguel is also expanding its tollways business, in particular the Tarlac-Pangasinan-La Union Expressway, connector road from Buendia to Balintawak, South Luzon Expressway from Tanauan to Lucena, Star Tollway in Batangas City, and Skyway.
"So there's so much work in process and we think we will also be finishing our MRT-7 by year 2020, three years from now. And also, by next year, 2018, we will be finishing our new Boracay Passenger Terminal with 12 airbreach, which can handle at least 20 million passengers. So so much things to do, but we are very confident we will be able to give our shareholders a very good return to their investment," Ang said.
SMC's infrastructure business, through San Miguel Holdings Corp., delivered higher profits last year, with revenues up by 13 percent to ₱19.9 billion, mainly driven by steady growth in traffic volume on all SMC-operated toll roads.