San Miguel Food and Beverage Inc. (SMFB) saw its first-half net income fall 4 percent to P22.1 billion as inflation, slowing economic growth, and geopolitical disruptions squeezed consumer spending and weighed on some export markets.

The company said in a stock exchange report on Wednesday that the decline came despite a 2 percent increase in consolidated revenue to P205.3 billion, as stronger sales from its Food business helped cushion weaker performance in Beer, the group's biggest earnings contributor.

Operating income likewise fell 4 percent to P28.8 billion, while EBITDA slipped 1 percent to P38.8 billion. Gross profit was largely unchanged at P58.4 billion, supported by revenue growth and disciplined cost management.

“Our business remained resilient through the first half of the year, supported by the strength of our operations and the hard work of our teams across the businesses,” SMFB Chairman Ramon S. Ang said. 

“We are managing our costs carefully, adding capacity where demand is growing, and keeping our brands within reach.”

The Food business emerged as the group's bright spot, with revenue climbing 5 percent to P99.3 billion on higher sales from its feeds segment and sustained demand for Magnolia dairy and coffee products, Purefoods luncheon meats and Pinoy Favorites, alongside its value-for-money offerings.

Food operating income rose 2 percent to P8.8 billion, while net income jumped 8 percent to P6.4 billion.

But pressure on household spending continued to weigh on Beer, which remained SMFB's largest earnings contributor.

Revenue edged down 1 percent to P73.7 billion as consumers became more cautious with discretionary purchases amid elevated inflation and a weaker peso. Operating income declined 11 percent to P14.4 billion, while net income dropped 12 percent to P11.4 billion.

Domestic beer revenue held steady at P66 billion after an earlier price increase to offset higher excise taxes tempered the impact of softer volumes. Overseas revenue fell to $128.5 million as shipping disruptions in the Middle East affected deliveries.

The Spirits business also faced softer volumes, although price increases kept revenue flat at P32.3 billion. Higher margins lifted operating income 8 percent to P5.4 billion, while net income rose 3 percent to P4.4 billion.

Looking ahead, SMFB expects consumer demand to remain under pressure but said its market-leading brands, stronger balance sheet and continued investments in capacity, operations, and its supply chain position the company to navigate the challenging environment. 

The company ended June with total equity of P205.3 billion, up 4 percent, alongside improved liquidity and leverage ratios.