Alaska to spend $5M for facility expansion

ALASKA Milk Corp. is spending US$5 million (roughly P260 million) this year to expand its manufacturing facility in San Pedro. Laguna, its president and chief operating officer Wilfred Steven Uytengsu Jr. said.
       In an interview during the company’s annual stockholders Tuesday, Uytengsu said the expansion, to be completed next year, would raise the production capacity of its powdered milk by 2 tons per hour.
       “While we have been affected by slower consumer spending, we believe that in the long-term, the market would rebound and we want to take advantage of that,” he said.
       This year, though, he said the company would likely see high operating costs due to continued rise in oil prices and higher inflation.
       “While we project higher sales this year, there could be a 15-percent reduction in bottomline because of the cost. However, it’s still too early to make a forecast at this time,” said Uytengsu.
       Alaska, he stressed, is not planning to raise the prices of produces. “In fact, we rolled back our prices [even with the E-VAT] back to the 1995 levels,” he said.
       Alaska has three principal business lines—liquid canned milk, powdered filled milk, and UHT ready-to-drink milk. In 2005, the company cornered a market share of 41 percent for evaporated filled milk product; 49 percent for the condensed milk and 21 percent for the powdered milk segment.
       “With our expanded capacity, we would see incremental gains in our market shares,” he said.
       The company ended the first quarter with a 20-percent drop in profit to P74.5 million from the P93.1 million registered in the same period in 2005.
       Its net sales, however, grew 7.4 percent to P1.26 billion from P1.17 billion mainly due to the strong performance of its powdered milk and high-value UHT products as well as the incremental sales generated from the distribution agreement with Kellogg’s.
       Cost of sales and operating expenses for the quarter grew at a faster 12 percent to P1.19 billion from P1.06 billion in the same period last year due to sharp increases in both local and imported raw material prices, particularly sugar, skimmed milk powder and tinplates.
       Operating expenses also rose on the back of more aggressive advertising and promotional spending to support volume growth and consumer demand. Honey Madrilejos-Reyes