1.
Profitability
1,200.00
25.00%
1,020.50
20.73%
20.58%
19.76%
1,000.00
941.19
20.00%
in millions (pesos)
818.82
800.00
746.05
725.80
15.00%
576.45
600.00
10.00%
400.00
5.12%
4.76%
5.00%
200.00
3.01%
201.69
195.14
149.35
48.57
48.16
21.88
-
0.00%
2019
Revenues
2020
Cost of Goods Sold
Gross Profit
Net Income
2021
Gross Profit Margin
Net Profit Margin
Figure 1. Profitability metrics over three years
The pandemic impacted 2020 profitability as net income margins declined from 4.76% in 2019 to 3.01% in 2020, but 2021 showed
a recovery, with net income margins surpasses the 2019 levels.
Gross Profit Margin= (Gross Profit / Revenues) x 100
Net Profit Margin= (Net Income / Revenues) x 100
•
Revenue and Net Income experienced a significant decline in 2020 due to the pandemic as restrictions implemented over
the country, dropping by 28.9% and 55.0% respectively.
Percentage change in revenues= (725.8m-1.02b)/1.02b *100 = 28.9%
Percentage change in net income= (149.4m-201.7m)/201.7m *100 = 55.0%
•
In 2021, revenues and net income rebounded strongly, with net Income nearly matching its 2019 level, with its margin
improved to 5.12%, surpassing pre-pandemic levels.
•
Gross profit margin over the 3 years were continuously increasing, showing good operational cost control over the years.
In 2021, it had nearly regained its gross profit from pre-pandemic with a higher margin.
Overall, the data reflects a strong recovery in profitability following the pandemic-induced downturn.
2.
Efficiency
Asset Turnover
Accounts Receivable Turnover
Formula: Receivable Turnover = Revenue / Average Trade Receivables
Comment:
Efficiency metrics show a clear impact from the pandemic in 2020:
Asset Turnover dropped significantly from 0.56 in 2019 to 0.38 in 2020, reflecting reduced operational activity and an increased
asset base. In 2021, it improved to 0.46, indicating partial recovery but still below pre-pandemic levels due to ongoing capitalheavy investments.
Receivable Turnover also declined in 2020 from 7.13x to 5.83x, suggesting slower collections. It rebounded to 6.58x in 2021,
showing better cash flow management and recovery in customer payments, though still slightly below 2019 efficiency.
3.
Liquidity
2.5
2.16
1.5
2.01
1.92
2
1.60
1.46
1.36
1
0.5
0
2019
2020
Current Ratio
2021
Debt to Equity Ratio
Figure 2. Comparison of SMC’s Current Ratio and Debt-to-Equity Ratio
Formula: Current Ratio = Current Assets/Current Liabilities
San Miguel Corporation maintained healthy liquidity throughout the pandemic; however, 2021 saw an increase in current liabilities
due to the resumption of operations and investments.
In December 2021, San Miguel Corporation (SMC) had ₱1.36 in current assets for every ₱1.00 in current liabilities, with a current
ratio of 1.36. In 2020, the ratio declined to 1.60, which still indicates an adequate short-term liquidity. The minor decline reflects
an increase in current liabilities resulting from the restart of large-scale activities and investments following the post-pandemic.
Still, SMC's liquidity status is reasonable and consistent with what is expected from a conglomerate engaged in capital-intensive
activities such as energy, infrastructure, and fuel.
4.
Financial Gearing / Leverage
PHP 1,600,000.00
PHP 1,400,000.00
PHP 1,200,000.00
PHP 1,000,000.00
PHP 800,000.00
PHP 600,000.00
PHP 400,000.00
PHP 200,000.00
PHP 2019
2020
Total Liabilities
Total Equity
Figure 3. Comparison of SMC’s Total Liabilities and Total Equity
2021
Formula: Debt-to-Equity Ratio = Total Liabilities/Total Equity
The Debt-to-Equity Ratio of 2.01 indicates that for every peso of equity, SMC has ₱2.01 in debt, which signifies a significant level
of leverage. This illustrates SMC's approach to capital investment, particularly in sectors like infrastructure and energy. While
leverage has slightly risen from 1.92 in 2020, it still falls within SMC's usual range. Strong operating cash flows from subsidiaries
such as Petron, San Miguel Brewery, and SMC Infrastructure reinforce the capacity to meet debt obligations. However, high
leverage also raises risks during economic downturns or when interest rates rise, resulting in increased financing expenses and
pressure on liquidity.
3.5
2.93
3
2.5
2.38
2.16
2.01
1.92
2
1.37
1.5
1
0.5
0
2019
2020
Debt-to-Equity
2021
Interest Coverage
Figure 4. Comparison of SMC’s Debt-to-Equity and Interest Coverage
SMC’s Debt-to-Equity ratio remained high but stable from 2019 to 2021, reflecting its continued reliance on debt to fund capitalintensive projects. Liquidity has become more constrained but maintains an adequate level; high leverage persists due to the
expansion of power and infrastructure initiatives. Although profitability facilitates debt repayment, the company must maintain
effective cash flow management to reconcile liquidity and leverage in the years ahead. The Interest Coverage ratio dropped sharply
in 2020 due to earnings pressure but rebounded in 2021, indicating improved profitability and debt servicing capacity. These
patterns underscore SMC’s stable approach to leverage and its capacity to bounce back in operational performance after the
pandemic.
5.
San Miguel Corporation (SMC) Investments and Analysis
This report provides analysis of San Miguel Corporation’s (SMC) investments and financial ratios for the years 2019, 2020 and 2021,
based on the company’s 2021 Annual Report. It covers investment allocations, key financial performance indicators, and
comparative insights highlighting changes in capital spending and profitability.
I. SMC Investment Overview
In 2020, San Miguel Corporation (SMC) adopted a cautious investment approach amid the pandemic’s disruptions, focusing on
essential projects, liquidity, and sustaining employment across its food, beverage, and fuel businesses. Capital spending of around
₱785 billion was directed mainly toward ongoing infrastructure works such as expressways and the New Manila International
Airport.
By 2021, as the economy reopened, SMC shifted to an aggressive expansion strategy, aligning with global sustainability standards,
and transitioning from coal to cleaner energy sources like natural gas and battery storage. Total investments rose by 40% to ₱1.1
trillion, driven by large-scale projects in infrastructure and power, including the MRT-7, airport, and BESS/LNG ventures. Food,
beverage, and environmental investments also grew, reinforcing supply chains and sustainability commitments.
Table No. 1: SMC Investment Share Table 2021
Investment Area /
Project
Description
Investment
Value /
Amount (₱)
Share / % of
Total
Investment
Remarks
New Manila International
Airport (Bulacan Aerocity)
MRT-7 (Quezon City–Bulacan)
Infrastructure
Large-scale transportation and
regional development projects
under SMC Infrastructure.
₱700 billion+
(multi-year)
≈45%
South Luzon Expressway TR4 &
TR5
TPLEX Extension
Pasig River Expressway (PAREX)
Skyway Stage 3 & SLEX Elevated
Extension
Power & Energy
Expansion of SMC Global Power
investments focusing on
renewable and cleaner energy.
₱250 billion
(approx.)
≈35%
Battery Energy Storage System
(BESS) facilities (1,000 MWh
capacity)
1,313 MW LNG Power Plant
New poultry, feed mill, and
meat processing facilities
Food & Beverage
(SMFB)
Water &
Environment
Sustainability
Expansion of production and
agricultural support capacity.
River rehabilitation, water
access, and reforestation
projects.
₱100 billion
(approx.)
₱30 billion+
≈15%
≈5%
Expansion of contract-growing
programs • Launch of plantbased food (Veega) • Upgrades
in packaging, distribution, and
logistics.
• Pasig River & TullahanTinajeros River cleanup (1.4M+
tons waste removed) • Bulacan
Bulk Water Supply Project
(Phase 1 completed, Phase 2-3
ongoing) • Nationwide Water
for All and reforestation
initiatives.
New cement plant in Davao
Industrial
Development
Expansion of Northern Cement
and related facilities.
₱10–15 billion
(est.)
≈2%
Capacity expansion and
provision for Mindanao
infrastructure projects.
II. Observations from Table No. 2 Comparative Matrix of Main Investment Area 2019-2021
1.
Infrastructure Sector
The Y2021 the highest share of investments throughout the three-year period. Investment share increased from
55% in 2019 to 61% in 2020, showing proportional growth despite the pandemic, as major public works
continued. However, a decrease to 45% in 2021 was observed, indicating an inverse proportional trend relative
to the increase in other sectors (particularly Power & Energy). This decline suggests a redistribution of investment
priorities rather than to experience contraction in infrastructure development.
2.
Power and Energy Sector
They have exhibited an initial decrease from 25% (2019) to 24% (2020), followed by a significant increase to 35%
(2021). This pattern demonstrates an inverse proportional relationship to infrastructure — as infrastructure’s
share decreased in 2021, Power and Energy’s share increased proportionally. The 2021 rise was mainly due to
large-scale battery storage and LNG power projects, reflecting a growing focus on renewable energy and
sustainability.
3.
Food and Beverage Sector
This sector showed minor fluctuations, with a decrease from 12% in 2019 to 11% in 2020, followed by an increase
to 15% in 2021. The trend indicates that investment in food-related industries was directly proportional to the
recovery of consumer demand and food security priorities post-pandemic.
4.
Water and Environmental Sector
The sector maintained relatively constant proportions, fluctuating slightly between 5% (2019), 3% (2020), and
returning to 5% (2021). These minimal changes suggest that investment levels were nearly constant and
independent of variations in other sectors, though inversely proportional to infrastructure during 2020.
5.
Industrial Sector
The industrial sector showed the lowest investment share across all years, decreasing from 3% (2019) to 1%
(2020), then increasing slightly to 2% (2021). This indicates an inverse proportional relationship with overall
investment activity during the pandemic, as industrial projects were among the most affected by economic
slowdowns.
Table No. 2 Comparative Matrix of Main Investment Area 2019-2021
Graph No.1: Comparative Matrix of Main Investment Area 2019-2021
70%
60%
50%
40%
30%
20%
10%
0%
Infrastructure
Power and Energy
Food and Beverage
2019
2020
Water and Environment
Industrial
2021
III. Summary
The overall trend shows a temporary contraction in 2020 followed by a robust, proportional recovery in 2021—
demonstrating effective economic adaptation, strategic planning, and a forward-looking shift toward sustainable and
diversified investments.
Table No. 3: SMC Changes of Investment from 2019-2021
Year
Approx. Total
(₱ billions)
Changes from
Previous Year
Ratio (vs. Previous Year)
𝐴 𝑃𝑟𝑒𝑣𝑖𝑜𝑢𝑠
𝑅𝑎𝑡𝑖𝑜2020 =
𝐴 𝐶𝑢𝑟𝑟𝑒𝑛𝑡
—
—
A
2019
₱930B
Aggressive expansion and modernization
before pandemic.
0.84: 1
2020
₱785B
↓ 16%
₱785B
₱930B
𝑅𝑎𝑡𝑖𝑜2020 =
𝑅𝑎𝑡𝑖𝑜2020 = 0.844
1.40: 1
2021
₱1,100B
↑ 40%
𝑅𝑎𝑡𝑖𝑜2021 =
Comments
₱1,100B
₱785B
𝑅𝑎𝑡𝑖𝑜2021 = 1.40
Conservative and defensive due to pandemic;
focused on continuity and sustained key
projects focused on food and beverages,
employment and on-going infrastructure
projects and thoughtful consideration to
government and private relation initiatives.
Transformational recovery, pivoting to new
projects backed by successful planning and
long-term growth projects with multitude of
expansion may it be infrastructure,
employment, power-energy, industrial.
6.
SWOT Analysis
•
3 MAJOR STRENGTHS
1) Strong and diversified assets
With total assets amounting to ₱2.051653 trillion (Consolidated Statements of Financial Position under “Assets”),
SMC shows substantial and diversified asset base with operating segments on Food & Beverage, Packaging, Energy,
Fuel & Oil, and Infrastructure (Note 6 – Segment Information) allowing SMC to gain better terms from suppliers and
handle big/major national projects such as airports, tollways, and power facilities.
2) Improvement in sales performance and operation recovery
The sales performance of 2021 amounting to ₱941.193 Billion is a significant improvement from 2020 Sales of
₱725.797 Billion. With the partial reopening of economy on 2021, Operating income increased by 64% or 117.2 Billion
compared to 2020 pandemic period with 71.5 Billion (Management’s Report, pp. 25). The 30% increase in sales and
higher operating margin (2021 - 12.45%, and 2020 – 9.85%) show that the company managed costs efficiently and
that the market demand has bounced back after the 2020 lockdown slump.
3) Healthy level of liquid assets
SMC maintained an adequate liquidity position, with current assets of ₱714.842 billion and current liabilities of
₱525.036 billion (Consolidated Statements of Financial Position – “Current Assets” and “Current Liabilities”). This
resulted in a Current Ratio of 1.36 × and Quick Ratio of 1.09 ×, supported by ₱300 billion in cash and cash equivalents.
Such levels indicate that the company can comfortably meet short-term obligations and sustain ongoing operations
amid market volatility.
•
3 MAJOR WEAKNESSES
1) High Financial Leverage and Interest Burden
SMC continues to rely on borrowings to fund its large-scale projects. This results in a debt-to-equity ratio of about 1.48
times, which means a greater portion of its assets are financed by loans rather than by shareholders. Finance Costs
recorded at ₱49.265 billion (Consolidated Statements of Income – “Finance Costs”) further show the heavy interest
expense the company bears yearly. Although this level of borrowing supports growth, it also increases exposure to rising
interest rates and refinancing risks.
2) Modest Return on Assets and Equity
While SMC’s operations improved in 2021, its profit returns remain relatively low compared with its large capital base.
Using figures from the Consolidated Statements of Income and Financial Position, the Return on Assets (ROA) is about
2.35 % (₱48.159 billion ÷ ₱2.051 trillion) and the Return on Equity (ROE) is 7 % (₱48.159 billion ÷ ₱681 billion). These
modest returns indicate that, despite the rebound in sales, the company’s massive investments have not yet generated
proportionally high earnings. This reflects the nature of SMC’s capital-intensive businesses, where projects take longer
to yield full returns.
3) Lower Earnings Attributable to Parent Company
According to the Consolidated Statements of Income, total net income for 2021 was ₱48.159 billion, but only ₱13.925
billion was attributable to owners of the parent company, while the rest was shared with non-controlling interests. This
means that a large portion of profits came from subsidiaries partly owned by other investors, reducing the income
directly available to San Miguel Corporation shareholders.
• 3 MAJOR OPPORTUNITIES
1) Asset Monetization and Strategic Partnerships
SMC’s diversified portfolio, as detailed in Note 6 – Segment Information, includes valuable businesses such as tollways, airports,
fuel, and power. These assets can be partially sold or opened to partnerships and joint ventures to raise funds and lower
outstanding debt. Such steps can strengthen the balance sheet, reduce interest expenses, and provide additional capital for new
projects without heavily relying on borrowings.
2) Growth in Renewable and Sustainable Energy
The Management’s Discussion and Analysis – SMC Global Power Holdings Corporation section mentions ongoing investments in
battery energy storage systems and renewable-energy projects. With the government’s push for cleaner and sustainable energy,
these initiatives give SMC a strong position to expand further into solar, wind, and hydro power, creating long-term growth
opportunities while supporting the country’s energy transition goals.
3) Improvement in Cash Management and Operating Efficiency
Based on the Consolidated Statements of Financial Position, Trade and Other Receivables amounted to ₱161.808 billion and
Inventories to ₱141.209 billion in 2021. When compared to sales and cost of sales in the Consolidated Statements of Income, these
figures translate to around 63 days of receivable collection and 69 days of inventory turnover. This suggests that by speeding up
collections and optimizing inventory levels, SMC could free up cash for debt repayment or reinvestment, improving its overall
operating efficiency.
• 3 MAJOR THREATS
1) Rising Interest Rates and Refinancing Risks
With more than ₱1 trillion in outstanding debt (Note 20 – Loans Payable and Long-Term Debt), SMC remains vulnerable to higher
borrowing costs if interest rates continue to rise. Increased rates would mean larger finance expenses, reducing future profits and
putting pressure on cash flows.
2) Regulatory and Legal Risks in Energy and Infrastructure
The company’s involvement in heavily regulated industries such as power generation, tollways, and airports subject it to policy and
legal uncertainties. Note 36 – Contingencies and Legal Proceedings and Note 31 – Other Commitments and Contingent Liabilities
mention several cases and pending approvals that could affect operations or delay project revenues. These ongoing regulatory
issues remain a potential challenge to future profitability.
3) Environmental and Supply-Chain Disruptions
As highlighted in the Management’s Discussion and Analysis – Business Risks section, events such as Typhoon Odette and global
fuel price volatility affected SMC’s operations in 2021. Natural disasters and sharp changes in raw-material prices can interrupt
production, increase costs, and lower overall margins.
7.
Synthesis
From 2019 to 2021, the financial performance of San Miguel Corporation remained strong and adaptable despite the encounter
of the major economic challenges. In 2020, the COVID-19 pandemic was roughly damaged the SMC in terms of revenue, income,
and overall efficiency. When lockdowns have been mandated, the consumers reduced in spending and supply chain disrupts in
many countries globally. Most of the business were forcibly closed and suffered heavy losses. But unlike everyone else, San Miguel
Corporation managed to stay in the market. Because of its wide-ranging operations, they sustained the business. In addition, the
investments in different industries such as food and beverage, fuel, energy, and infrastructure allowed them to recover and avoid
severe effects from the crisis.
After a year, San Miguel Corporation started the business with its high revenues and profits just like what they have in their pre
pandemic levels. The net income from 2019 and 2021 showed how the company quickly bounce back from the crisis. This recovery
happened because the economy reopened, and more people bought the company’s products. The community started to act
normally again outside their home and the market is also rising. Because of its wise strategy in decision making and planning, the
San Miguel Corporation’s choice to keep expanding and pursuing long-term plans during uncertain times is successful.
However, the San Miguel Corporation needs to be careful in handling its debts and keeping its operations efficient, especially while
it continues to work on big projects. It is important to balance growth and financial stability to make sure its progress will last. In
summary, the journey of San Miguel Corporation from 2019 to 2021 tells a story of strength and wise strategy and planning. It gave
us the thought that in different types of businesses, we can recover quickly and become even stronger after a major economic
challenge. It helped the company sustain its operation even in a major crisis happened.