San Miguel Food and Beverage, Inc. (SMFB) reported a 4% year-on-year increase in first-half net income to P22.1 billion, buoyed by stronger food sales that offset weaker consumer demand and declining beer revenues.

The listed food and beverage unit of San Miguel Corp. (SMC), one of the Philippines' largest and most diversified conglomerates, said in a media release on Wednesday that revenue for the six months ended June rose 2% to P205.3 billion, while operating income climbed 4% to P28.8 billion.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) edged down 1% to P38.8 billion, with an EBITDA margin of 19%. Gross profit held steady at P58.4 billion.

"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," Chairman Ramon S. Ang said.

The food segment continued to serve as SMFB's primary growth engine, with revenue advancing 5% to P99.3 billion. Growth was underpinned by stronger demand for the company's animal feeds business and branded retail products, including Magnolia dairy and coffee. The food division now accounts for nearly half of SMFB's consolidated revenue, underscoring a broader consumer trend in the Philippines toward at-home consumption and essential food categories amid elevated inflation.

Beer revenue slipped 1% to P73.7 billion, though the division remained a major contributor to overall earnings. Domestic beer sales reached P66 billion, aided by price adjustments carried out last year to counter higher excise taxes despite softer shipment volumes. The Philippines has implemented successive increases in excise taxes on alcoholic beverages under the sin tax reform law, which has periodically pressured volumes for brewers.

International beer revenue came in at $128.5 million, reflecting slower sales as shipping disruptions in the Middle East disrupted deliveries. The beer segment's operating income dropped 11% to P14.4 billion, and net income fell 12% to P11.4 billion.

The spirits business posted revenue of P32.3 billion amid softer volumes and higher pricing, while operating income improved 8% to P5.4 billion.

SMFB cautioned that consumer demand is likely to remain under pressure in the near term, but said its market-leading brands and stronger financial position leave it well placed to navigate the current environment. Philippine consumer spending has been affected by persistent inflation and higher borrowing costs, trends that have weighed on discretionary purchases across the beverage sector.

"We are managing our costs carefully, adding capacity where demand is growing, and keeping our brands within reach," Mr. Ang said.

Shares of SMFB declined P0.30, or 0.61%, to close at P48.60 each on Wednesday. — Ashley Erika O. Jose