August 10, 2015

PF reports 1H15 net income of P1.8b

In a press statement, San Miguel Pure Foods Company Inc (PF) announced 1H15 net income of P1.8b +5% YoY on the back of a 3% revenue growth to P50.5b. Operating income grew 2% YoY to P2.7b mainly driven by its branded business. The company’s branded food business grew operating profit by 20% YoY on significantly lower cost of raw materials.

The same drop in commodity prices however, negatively affected its Agro-Industrial and flour business which was already being weighed by a glut in the poultry and fresh meats business. This led to overall operating income growth of just 2%. In a separate disclosure PF announced cash dividends of P1.20/sh for common shareholders and P14.14225/sh for holders of Series 2 preferred shares.

Our take: Due to the larger size of PF’s agro-industrial and four business compared to its branded food segment, we expect the prevailing lower commodity prices to have a greater negative impact on the company and this may tend to weigh on earnings growth. The cashdividend of P1.20/sh translates to a yield of 0.7% based on the previous closing price of P163.6 – WealthSec