UPDATE 1-San Miguel Q1 net profit down 76 pct; beer gains

* Flagship beer unit's quarterly net income up 8 pct

* Forecasts higher sales at beer unit in run up to 2010 polls (adds results details from company statement)

MANILA, May 11 (Reuters) - San Miguel Corp's (SMCB.PS) quarterly net profit fell 76 percent to 2.7 billion pesos but its brewery arm saw modest gains, the food-to-power Philippine conglomerate said on Monday.

The company forecast its flagship San Miguel Brewery (SMB.PS) beer unit, which is partly owned by Japanese brewer Kirin Holdings (2503.T), to post stronger sales in the run up to the 2010 elections as politicians spend more to boost their popularity.

San Miguel Brewery (SMB.PS) -- which makes nine out of 10 beers sold locally -- posted a net income of 2.66 billion pesos in January to March, up 8 percent from a year earlier, supported by a 3 percent increase in operating income.

San Miguel Corp is diversifying into heavy industry to fuel future growth after dominating its home market for food and beverage. It has bought a 27 percent stake in power distributor Manila Electric Co (MER.PS) and has a pending purchase of a majority stake in oil refiner Petron Corp (PCOR.PS).

The group is also looking to buy a coal-fired power plant in the Philippines and a stake in the country's oil and gas explorer PNOC-Energy Corp (PEC.PS).

It also wants to buy into Indonesia's largest coal producer by market value, Adaro Energy (ADRO.JK), where a stake worth about $500 million is currently up for sale. [ID:nMAN86270] [ID:nMAN366322].

Southeast Asia's biggest food and drinks group's January-March net income fell from 11 billion pesos in the same period of 2008, which reflected proceeds from the sale of its Australian assets, said analysts who attended a company briefing.

San Miguel disclosed its first-quarter bottomline data about two hours after it announced the figures to analysts in a closed-door briefing.

Without non-recurring items, the group's first-quarter net income climbed 25 percent to 2.83 billion pesos from a year earlier, the company said in a statement.

Analysts do not give quarterly estimates for San Miguel but the company's 2009 net profit is expected to be 12 billion pesos, down 38 percent from 19.3 billion pesos last year, according to Reuters Estimates.

The group's first-quarter operating income climbed 11 percent to 4.29 billion pesos, supported by gains in its beer and liquor units.

Liquor arm Ginebra San Miguel (GSMI.PS) reported a 92 percent jump in first quarter net income to 249 million pesos, backed by a 35 percent rise in revenue and a 108 percent surge in operating income, San Miguel said.

San Miguel's B shares, open to all investors, gained 0.96 percent on Monday, in line with the broader market's 1.05 percent rise. Its A shares and beer unit both closed unchanged at 51.5 pesos and 8.9 pesos, respectively. ($1 = 47.29 pesos) (Reporting by Rosemarie Francisco; Editing by Muralikumar Anantharaman)