From 1995 through 1997, SMC suffered a downturn in its main domestic businesses, while overseas operations were still in the red. Profits plummeted. In response, a major restructuring of the company's loss-making food businesses was undertaken. SMC's Magnolia ice cream and milk business was merged with the Nestlé Philippines group, to form Magnolia-Nestlé Corporation. By late 1998, SMC's stake in this business was acquired by Nestlé. SMC also exited from the ready-to-eat meal sector and curtailed the operations of its shrimp farming business. By late 1997, the company was also beginning to feel the effects of the Asian economic crisis.