Ginebra San Miguel Inc. (GSMI), the spirits business of conglomerate San Miguel Corp., said the challenges that it faced last year are still present today, which will put pressure on margins.
Emmanuel B. Macalalag, the company’s senior vice president and general manager, said the company continues to grapple with the impact of the war in Ukraine, the increase in energy cost, higher inflation from last year and the hike in excise tax earlier this year.
“To protect and improve margins, we raised prices earlier this year, resulting in a slight volume dip. Adjusting the timing of a price increase earlier meant that the selling period this year using all prices was 15 days fewer compared to last year,” Macalalag said during the company’s annual stockholders’ meeting.
As a result, sales volume in the first two months of 2023 was 11 percent lower than last year’s level, he said. The company, however, rolled out several consumer promotions last March, which allowed the company to trim down the deficit to 5 percent at the end of the first quarter. Ginebra sold 11.5 million cases during the period.
“With higher prices sales in the first quarter amounted to P12.9 billion, 3 percent better than the same period last year.”
Last year, the company’s sales hit a new record of 44.6 million cases.
For the first quarter of the year, the company’s net income surged 81 percent to P2.51 billion from the previous year’s P1.33 billion, but this was due to the transfer of Ginebra’s rights on Don Papa rum to Diageo Philippines Inc.
Operating income, however, dropped by 9 percent to P1.6 billion due to lower volumes and higher input costs in the first two months of the year, reflecting the temporary impact of a price increase in February. This was, however, tempered by marketing initiatives in March.
“Despite the various challenges the industry has faced these past couple of years, GSMI has remained resilient and has consistently delivered excellent results. We’re off to a good start this year and we look forward to implementing programs that will excite our markets and drive our full-year performance,” Ginebra President and CEO Ramon S. Ang said.
The company’s board earlier this month approved the declaration and payment of regular cash dividends of P0.75 and special cash dividends of P1.75 on common shares to all shareholders of record, as of May 24.