Meralco stake sale seen doubling SMC 2013 income to P57 billion

Manila Bulletin

by James Loyola
January 13, 2014

San Miguel Corporation expects its net income to more than double to as much as P57 billion in 2013 from P27 billion in 2012 if it gets to book all of its non-recurring gains from the sale of the group’s stake in Manila Electric Company.

In an interview with reporters, SMC president Ramon S. Ang noted that “if you notice our earnings in SMC Group has always been in the uptrend for the last 15 years. Initially, we will be ending 2013 at about P39 billion net income. But I don’t know if finally we may reach up to P57 billion net income.”

He explained that “P39 billion is the initial estimate but it may even go up because of the sale of the Meralco shares, if we can book all of it (in 2013).”

“The businesses of SMC is continuously improving. Its core earnings is very stable. Our EBITDA is more than $2 billion and our cash flow is very strong,” Ang said.

He added that, “with our Petron refinery upgrade about to run, the company has a good future. Once it starts operations, our refinery alone should give us a minimum $800 million EBITDA, and other generating planta should also contribute.”

However, Ang said he does not know yet if earnings in 2014 will be better than 2013 because of last year’s huge non-recurring gains. “We don’t know but if we sell something, it might even surpass 2013,” Ang said.

Ang said earlier that all units, except Philippine Airlines Inc., are expected to contribute to the company’s bottomline.

In 2013, SMC sold its remaining 27.1 percent stake in Manila Electric Company (Meralco) to JG Summit Holdings Inc. for P72 billion.

Of the 27.1 percent stake of the San Miguel group in Meralco, a 15.73 percent stake is directly owned by SMC while 6.13 percent are held by subsidiary SMC Global Power Holdings Corporation and 5.24 percent owned by San Miguel Pure Foods Company, Inc.

SMC had raised P17.37 billion in July from an overnight placement of a 5.7 percent stake in Meralco. It sold 64.33 million Meralco common shares at P270 per share.

From both transactions, SMC will have raised P59.16 billion for its investment in Meralco or a total of P89.37 billion for the entire group’s stake in  the power distribution utility.

Prior to the sale, SMC owned 32.8 percent of Meralco of which 21.46 percent were directly owned by SMC while the balance are held by SMC Global and Pure Foods. (James A. Loyola)  source