What’s pulling down San Miguel Purefoods’ milling business
San Miguel Purefoods Company Inc.’s agro-industrial and branded value-added segments are moving in tandem and are exhibiting strong growth. Its milling business, however, is moving in the opposite direction.
In the first three months of the year, San Miguel Purefoods’ milling operations reported about a quarter fall in its net income to P339.3 million from P457 million a year ago as revenues dropped to P2.3 billion from P2.6 billion.
In its disclosure to the stock exchange, San Miguel Purefoods said “the industry-wide continuing downtrend in the selling prices of basic flour, following the behavior of wheat prices in the world market, weighed down the performance of the Flour Milling business under San Miguel Mills, Inc. (SMMI).”
“Competitive pressures from lower-priced imported flour and new industry entrants, resulted in bigger drop in basic flour’s selling prices compared to the decline in wheat costs,” the company said.
“All these, combined with the grain terminal’s decreased revenue due to lower volume unloaded, led to lower operating profit versus 2015 level,” the company added.
San Miguel Purefoods said it expects the price of basic flour to remain soft throughout the year. To improve the segment’s performance, the company will focus on adding value to its flour products by increasing sales of customized and specialty mixes. (By: Eileen A. Mencias)