LISTED Ginebra San Miguel Inc. (GSMI), the alcoholic beverage arm of the San Miguel group, is looking at better profits this year on the back of better sales from key products and cost-saving measures as indicated by an improvement in first-half figures.

At the sidelines of the shareholders meeting on Wednesday, San Miguel Corp. president Ramon Ang told reporters that GSMI is targeting close to P1 billion net income in 2009, a reversal from last year’s figure when the firm reported a loss of P279.24 million.

This early, the company is already reporting better first-half figures with its net income up 75.6 percent to P425 million. Revenues likewise rose 28 percent from 2008 figures to P9.32 billion, largely due to stronger sales mostly from Gran Matador brandy and GSM Blue gin products.

Cash flow, as measured by earnings before interest, taxes, depreciation and amortization ratio, grew 41 percent P867 million.

“We cleaned up the company and focused on the most saleable products of the company. [Gran] Matador brandy is now No. 1 and is most acceptable to drinkers today,” said Ang. 

The company also assigned several operational activities to third-party companies to save on costs.  In particular, it inked a partnership with two separate companies via a Build Operate Transfer scheme lower supply chain expenses. The deals are for the construction of facilities, which already broke ground in the Isabela and Bicol regions, that will each produce 400,000 cases of GSMI core products per month.

“They offered a good deal where GSMI will practically have no cash out. It’s going to be a lower cost per case compared with what we are doing today. We can expect [these facilities] to be up and running by the first quarter of next year,” added Ang, as he noted that the deals provide that operations will revert to the firm in 10 years.

No new product launches are planned by GSMI this year, said Ang, as the firm will focus on its current line which includes flagship brand Ginebra San Miguel, GSM Blue and Antonov Vodka, among others. “At the moment we are concentrating on these main lines which are giving the company a very strong income,” said the San Miguel executive.

In the same meeting, Eduardo Cojuangco, GSMI chairman, said the firm is looking at alternative raw materials, such as cassava and sugar  for alcohol distillation, to ensure a steady supply for the firm. He said there are ongoing talks with groups for contract farming and planting to this end.