Thursday, May 11, 2006

San Miguel's strategic directions

By Tony Lopez
asl@biznewsasia.com


AFTER gobbling up companies in the past five years, San Miguel Corp. needs time to digest what it has eaten. SMC Chairman and CEO Eduardo Cojuangco Jr. defines that as sustainability.

“If 2005 was a year of acceleration, 2006 will be one of staying the course,” he told stockholders last Tuesday during a jampacked annual meeting. “What you are going to see from us going forward is San Miguel sustaining its current growth and giving you dependability and reliability in our results,” he explained.

“Sustainability is a hard thing to deliver, “ he pointed out. “Achieving it will make all the difference to whether San Miguel will be around for the next few decades and will be as strong in the future as we are at present.”

Early on in 1998, San Miguel, under the new management team of Chairman Cojuangco and President Ramon S. Ang determined that San Miguel is a food company, not just a brewery or a packaging company. And not just a food company but one that is one among the ten largest in Asia in sales. To achieve that, Ang set what he himself called a brave and insane target—$10 billion in revenues by 2008.

You cannot quintuple revenues from $2 billion to $10 billion in less than five years by just relying on beer, volume sales of which was down last year. Instead, you buy other companies, using SMC’s tremendous goodwill.

Thus, in 1998, SMC divested itself from its interests in Nestle Philippines and Coca-Cola Beverage PLC of Europe. It then bought Metro Bottled Water for P1.4 billion in 1999, Sugarland Beverage for P2.9 billion and J. Boag and Son of Australia for $54 million in 2000; reacquired Coca-Coca Bottlers Philippines, Inc. for $1.2 billion, acquired Purefoods for P8 billion and Cosmos for P14.1 billion in 2001.

In 2002, SMC entered into a strategic partnership with Kirin which initially bought 15 percent of SMC for P39 billion. The Japanese brewer later increased its equity to 20 percent, becoming the single largest corporate stockholder. In 2003, SMC acquired hogs and feeds company TTC Vietnam for $35 million; in 2004, bought Thai Amarit beer for $102 million and Australian juice leader Berri Ltd for $120 million, and entered into joint ventures with Thai Lie for liquor and Super CoffeeMix.

In 2005, SMC snatched 100 percent of Australia’s No. 1 dairy company National Foods Ltd for $1.8 billion and merged it with Berri. It also bought Guolene Packaging of Malaysia. This year, the food and brewery giant bought 42 percent of Del Monte Pacific, thru Nutri-Asia Pacific and Australia’s Lactos, a company which has the technology to preserve cheese for as long as one year.

The result of all those acquisitions is a dramatic 30 percent jump in 2005 revenues to P226.7 billion, making SMC the Philippines’ largest company. However, because of borrowings to finance its acquisitions, net income amounted to only P9.03 billion, up two percent.

Meanwhile, explains Danding Cojuangco: “We [have] raised the underlying sales growth of our leading brands, reshaped our business portfolio and successfully integrated the largest acquisitions we have ever made. In part because of the National Foods and Del Monte Pacific acquisitions, we made great headway on key strategic priorities: diversifying and accelerating the shift in our portfolio toward branded product categories and geographies in which we can leverage both sustainable competitive advantage and scale.”

Majority of the businesses made great progress in 2005, he said, and “we see that each of them will further improve as we head into the second half of 2006.” “We are just getting started,” Cojuangco said.

email tonylopez@biznewsasia.com

Saturday, May 06, 2006

President Arroyo's stunning legal setbacks

By Tony Lopez tonylopez@biznewsasia.com


In just two weeks, President Arroyo suffered stunning legal and constitutional setbacks before the Supreme Court on three major issues.

EO 464 prohibits senior government officials from appearing before a Congress inquiry without her consent.

Calibrated Preemptive Response (CPR) was used by the police and the military to violently disperse protesters.

PP 1017 was used by the police and military last February to make warrantless arrests and a raid on an anti-government daily.

The Court spoke in one voice on the EO 464 and CPR cases and voted 11-3 on PP 1017.

The court said EO 464, which Malacañang didn’t even bother to publish and therefore could not have been valid, is a direct violation of Congress’s power of inquiry and an impairment of the people’s right to information.

“Resort to any means then by which officials of the executive branch could refuse to divulge information cannot be presumed valid. Otherwise, we shall not have merely nullified the power of our legislature to inquire into the operations of government, but we shall have given up something of much greater value – our right as a people to take part in government,” declared Justice Conchita Carpio Morales, the ponente.

Also, executive privilege covers categories of specific information, not categories of persons.

The Court upheld BP 880 and reiterated its basic policy of upholding the fundamental rights of our people, especially freedom of expression and freedom of assembly.

The Court discarded CPR and mandated maximum tolerance, defined by BP 880 as “the highest degree of restraint that the military, police and other peacekeeping authorities shall observe during a public assembly”. BP 880 also requires the police to be away at least 100 meters from the protesters and not to carry firearms of any kind and shall not use tear gas, smoke grenades, water cannons or similar anti-riot device unless the public assembly is attended by actual violence. No leader, organizer or participant can be arrested unless he has violated a law during the assembly.

Mayors can refuse permits only when there is “imminent and grave danger of a substantive evil”. The Court ordered the opening up within 30 days of freedom parks in all 1,500 towns and cities nationwide. Unless this is done, all public parks and plazas automatically become freedom parks where assemblies can be held without need for a permit.

In PP 1017, the Court ruled that the President can summon the military to prevent or suppress lawless violence but she cannot declare a state of emergency just so she could issue decrees or order the takeover of a private utility or business affected with public interest – without prior legislation.

The companion General Order No. 5 is constitutional insofar as it provides standard for the military and the police to suppress or prevent lawless violence. But it is unconstitutional insofar as it deals with acts of terrorism because these acts have not been defined and made punishable by Congress.

In all three cases thus, Arroyo lost and lost dismally. No amount of nitpicking on the part of her legal advisers can make it appear she lost some and won some.

Recalling how a past president fell into the precipice of authoritarianism, Chief Justice Artemio Panganiban warned in his concurring opinion on PP 1017:


“Some of those who drafted PP 1017 may be testing the outer limits of presidential prerogatives and the perseverance of this Court in safeguarding the people’s constitutionally enshrined liberty. They are playing with fire, and unless prudently restrained, they may one day wittingly or unwittingly burn down the country. History will never forget, much less forgive, this Court if it allows such misadventure and refuses to strike down abuse at its inception. Worse, our people will surely condemn the misuse of legal hocus pocus to justify this trifling with constitutional sanctities.”


Email tonylopez@biznewsasia.com

Invitation toanart exhibit May 25

To all BizNewsAsia readers who are CEOs and CEOs of BizNewsAsia newsmagazine corporate advertisers:

You are invited to the BizNewsAsia pre-Fifth Anniversary Cocktail Reception and Art Exhibit on Thursday, May 25, 2006, 6pm at the Manila Peninsula Gallery.

There are three compelling reasons why we are inviting you to this event:

The cocktail reception marks the beginning of our celebration of the fifth year this year of BizNewsAsia, today the largest weekly business and news magazine of its kind in the Philippines with more than 60,000 high-end readers.

The art exhibit features the paintings, mostly in watercolor, of my elder brother, Leonardo Lopez, Canadian-based architect, painter and civil servant. More than 50 paintings will be on display for two days at the Pen Gallery.

Proceeds from the sale of the art works will go to a journalism scholarship fund in memory of our brother, the late People’s Tonight Managing Editor and DWWW political-economic commentator Eleazar Lopez who met an untimely death on January 19, this year.

I hope that you will honor us with your presence and make our affair a truly memorable and meaningful one.


To confirm your invitation and your attendance, pls call Tess of Manila landline 02-744788. Or email me at tonylopez@biznewsasia.com. Unless you confirm your attendance, it may take time for you before you can enter the exhibit area and reception.

Thanks



Tony Lopez
Editor and Publisher
BizNewsAsia

tonylopez@biznewsasia.com

Arroyo's stunning legal setbacks

By Tony Lopez tonylopez@biznewsasia.com


In just two weeks, from April 20 to May 3, 2006, President Arroyo suffered stunning legal and constitutional setbacks before the Supreme Court on three major issues.

Executive Order 464 prohibits senior government officials from appearing before a Congress inquiry without her consent.

Calibrated Preemptive Response (CPR) was used by the police and the military to violently disperse protesters.

Presidential Proclamation (PP) 1017 was used by the police and military last February to make warrantless arrests and a raid on an anti-government daily.

The Court spoke in one voice on the EO 464 and CPR cases and voted 11-3 on PP 1017.

The court said EO 464, which Malacañang didn’t even bother to publish and therefore could not have been valid, is a direct violation of Congress’s power of inquiry and an impairment of the people’s right to information.

“Resort to any means then by which officials of the executive branch could refuse to divulge information cannot be presumed valid. Otherwise, we shall not have merely nullified the power of our legislature to inquire into the operations of government, but we shall have given up something of much greater value – our right as a people to take part in government,” declared Justice Conchita Carpio Morales, the ponente.

Also, executive privilege covers categories of specific information, not categories of persons.

On CPR. the Court upheld BP 880 and reiterated its basic policy of upholding the fundamental rights of our people, especially freedom of expression and freedom of assembly.

The Court discarded CPR and mandated maximum tolerance, defined by BP 880 as “the highest degree of restraint that the military, police and other peacekeeping authorities shall observe during a public assembly”. BP 880 also requires the police to be away at least 100 meters from the protesters and not to carry firearms of any kind and shall not use tear gas, smoke grenades, water cannons or similar anti-riot device unless the public assembly is attended by actual violence. No leader, organizer or participant can be arrested unless he has violated a law during the assembly.

Mayors can refuse permits only when there is “imminent and grave danger of a substantive evil”. The Court ordered the opening up within 30 days of freedom parks in all 1,500 towns and cities nationwide. Unless this is done, all public parks and plazas automatically become freedom parks where assemblies can be held without need for a permit.

In PP 1017, the Court ruled that the President can summon the military to prevent or suppress lawless violence but she cannot declare a state of emergency just so she could issue decrees or order the takeover of a private utility or business affected with public interest – without prior legislation.

The companion General Order No. 5 is constitutional insofar as it provides standard for the military and the police to suppress or prevent lawless violence. But it is unconstitutional insofar as it deals with acts of terrorism because these acts have not been defined and made punishable by Congress.

In all three cases thus, Arroyo lost and lost dismally. No amount of nitpicking on the part of her legal advisers can make it appear she lost some and won some.

Recalling how a past president fell into the precipice of authoritarianism, Chief Justice Artemio Panganiban warned in his concurring opinion on PP 1017:


“Some of those who drafted PP 1017 may be testing the outer limits of presidential prerogatives and the perseverance of this Court in safeguarding the people’s constitutionally enshrined liberty. They are playing with fire, and unless prudently restrained, they may one day wittingly or unwittingly burn down the country. History will never forget, much less forgive, this Court if it allows such misadventure and refuses to strike down abuse at its inception. Worse, our people will surely condemn the misuse of legal hocus pocus to justify this trifling with constitutional sanctities.”

Arroyo is thus warned by the Court not to drift to authoritarianism nor become a dictator. The tribunal will stop her in her track.

In his concurring opinion on 1017, Chief Justice Panganiban reminds his colleagues in the high court:

“And even for those who deeply care for the President, it is timely and wise for this Court to set down the parameters of power and to make known, politely but firmly, its dogged determination to perform its constitutional duty at all times and against all odds. Perhaps this country would never have had to experience the wrenching pain of dictatorship; and a past President would not have fallen into the precipice of authoritarianism, if the Supreme Court then had the moral courage to remind him steadfastly of his mortality and the inevitable historical damnation of despots and tyrants. Let not this Court fall into that same rut.”



Email tonylopez@biznewsasia.com