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Saturday, May 10, 2014

Purefoods eyes acquisition of add'l cargo ships to bring down logistics costs

San Miguel Pure Foods Co Inc may buy new Panamax vessels to reduce logistics costs, as it moves to improve efficiencies with the looming Asean economic integration.

On the sidelines of the company's stockholders meeting yesterday, San Miguel Corp (SMC) president Ramon S. Ang told reporters that SMC Shipping and Lighterage Corp is evaluating a plan to purchase six Panamax cargo vessels at a cost of $50 million each.

Each Panamax, which can handle 65,000-85,000 tons of payload, will generate annual savings of $10 million.

SMC Shipping is studying "if it makes sense to buy the Panamax kasi malaki talaga ang requirement ng Purefoods for feeds, soybean meal, cassava and flour," said Francisco Alejo III, the president of the food subsidiary.

Last year, Purefoods inaugurated a grains terminal in Mabini, Batangas that can accommodate the large Panamax vessels, allowing the company to enjoy lower freight costs and terminal fees.

The acquisition of new cargo vessels is part of Purefoods' move to improve efficiencies as tariff duties have come down to zero with Asean integration.

"In our case, we are now very competitive because we’ve seen how much tariff duties have come down. That’s why we’re improving our efficiencies to be competitive with the possible entry of foreign brands. So far, we're able to compete as a country," Alejo said.

Ang has issued marching orders for Purefoods to raise volumes by at least double digits and improve the market share of all its products, which are “either ranked number one or two” in the market.

"We are very optimistic about country growth because we feel there will be more consumption. We want to ride the momentum of the improvement in our economy because in many cases we have a very big market share so we're relying on increased consumption," Alejo said.

For its regional expansion, Purefoods is looking at possible acquisitions in Indonesia. It has sent people to evaluate opportunities in Cambodia, Vietnam and Myanmar.

SMC has no plans to sell shares in Purefoods, Ang said. Last year, the food company was considering selling more shares in 2014 to widen public ownership.

Purefoods expects the positive momentum seen in the first quarter of the year to be sustained for the rest of 2014, Alejo said.

Purefoods' net income rose by nearly a quarter to P870 million in the first three months of the year on improved efficiencies coupled with higher volumes and selling prices.

Consolidated revenues reached P24.2 billion in the first quarter, a five percent increase over the same period last year

Purefoods is part of SMC, which has interests in beverage, packaging, power generation, oil refining and retailing, mining, telecommunications, property development, air transportation and infrastructure.

- Interaksyon

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