Company Briefs - 3 Jul 2007

SPC shortlisted for first Asian energy company award

REFINER Singapore Petroleum Company (SPC), which recently ventured into oil and gas exploration, and Vopak Terminals Singapore, which operates one of the biggest independent oil terminals here, are among the five shortlisted contenders for the inaugural Energy Company of the Year, Asia award.

The two face stiff competition as the top Asian energy company from Malaysia's national oil company Petronas, which just reported RM46 billion (S$20.4 billion) in net profit in its last financial year; the Electricity Generation Authority of Thailand; and Korean refiner S-Oil Corp.

The award recognises an energy company operating in Asia which is making a significant contribution to the energy business.

The inaugural energy awards, to be presented during the upcoming Asia-Pacific Petroleum Conference here in September, also feature three other categories - for excellence in energy trading, broking, and environmental markets.

These first regional awards to be conferred by Energy Business recognise the critical contribution being made by the Asian marketplace to the global energy dynamics.

In the Energy Trading and Risk Management, Asia category, the shortlisted five include SGX AsiaClear, which last year launched Asia's first and only over-the-counter clearing platform for oil swaps here; and Societe Generale.

Heineken upbeat on growth, performance in Asia-Pacific

HEINEKEN Asia Pacific, which together with Fraser & Neave owns mainboard-listed Asia Pacific Breweries (APB), is upbeat on growth in the region.

In an interview with BT last week, Heineken Asia Pacific president Siep Hiemstra said that the volume growth of the Heineken brand in Asia-Pacific last year was 10 per cent. While declining to be specific about actual figures, he said he is optimistic about the brand's performance in the coming years.

According to one report, the Heineken group could post Ebit (earnings before interest and taxes) growth of as much as 18 per cent over the next three years.

In a recent 'buy' report on the group, which is listed in Amsterdam, Dutch bank Rabobank said it believes Heineken is set for strong growth in Asia over the next three years. 'After a close look at the growth initiatives, we raise our 2008-2010 Ebit estimates for Asia by 5-18 per cent. We now expect volume growth of 10-12 per cent until 2010 compared to 6 per cent previously,' said Rabobank.

Heineken Asia Pacific owns 42 per cent of APB, and through its 13 partnerships it has a presence in 20 countries in Asia-Pacific. Its strategy of placing value over volume, that is focusing on larger margins instead of larger sales via its premium brands, is clear from its latest results. For the year ended Dec 31, 2006, Asia-Pacific revenues grew 11 per cent to 600 million euros (S$1.24 billion), volume grew 7 per cent to 6.4 million hectolitres but Ebit jumped 29 per cent to 95 million euros. One hectolitre is 100 litres.

'We want to be the biggest value player in Asia-Pacific, instead of trying to be the biggest volume player. This has always been our aim. We can spearhead this ambition through our premium brands, which will enable us to grow to be number one or two in the emerging markets,' Mr Hiemstra said.

A generous portion of this growth has been driven by its Indochina operations where, according to industry forecasts, beer consumption in Vietnam is expected to grow by 8 per cent per annum.

Rabobank said in 2006 APB sold around two million hectolitres in Vietnam, which the bank estimates yielded Ebit of 50-60 million euros. 'Based on the acquisitions (of Foster's assets) and capacity expansion, we believe volumes could double between 2006 and 2010 and Ebit growth could be even faster given scale benefits,' said Rabobank.

Despite China and India's large sizes, their contributions are not significant yet as both markets are proving tough nuts to crack. 'In China, Ebit per hectolitre is just one euro while in India, beer consumption is tiny relative to the population size - around two cans per person per year,' said Mr Hiemstra.

The reasons China's margins are so low, according to Mr Hiemstra, are 'oversupply, fierce competition and considerable seasonality'. As a result, the company has decided to focus on high-Ebit regions.

In India, Heineken has purchased a majority stake in Aurangabad Breweries and has a joint-venture company in Andhra Pradesh to build a new brewery in Hyderabad.

'We know that China and India are potentially very important markets and we have been positioning ourselves accordingly, in slow and steady fashion for when the markets there take off,' said Mr Hiemstra.