Tuna canner Century braces for rough seas ahead
The country’s largest canned food company Century Pacific Food Inc. (CNPF) aims to sustain a double-digit growth in earnings this year despite a more challenging environment brought about by rising input costs and weakening peso.
The moderate year-on-year net profit growth of 10 percent in the first quarter “sets the tone for the balance of the year,” CNPF president and chief executive officer Christopher Po said in a press briefing after the company’s stockholders meeting on Friday. The firm’s bottom line grew 37 percent for full-year 2016.
“Our tailwinds in 2016 are our headwinds in 2017,” Po said.
Last year, the downturn in the commodity cycle lowered input costs and thus improved CNPF’s margins. Lower tuna prices last year, for instance, allowed CNPF to beef up low-cost inventory and increase factory utilization. The presidential elections in 2016 also provided an extra boost to consumer spending.
This year, Po said CNPF’s net profit would be “a bit under pressure” compared to last year due to rising input costs. He said the weakening peso would also lead to more expensive imports.
He said, however, CNPF was still on track of its goal of growing revenues by two times the rate of the country’s gross domestic product (GDP). In the first quarter, the country’s GDP grew by 6.4 percent year-on-year.
“The peso weakened, commodity prices are higher (so) there’s a bit more uncertainty right now. But we are still optimistic about business prospects. We do expect—and it’s happening now —there’s margin pressure,” Po said.
Po also told shareholders that CNPF would continue to look for opportunities to deploy capital, with the intention of maintaining return on equity levels at the current 20 percent or at least the high teen levels.
He said the export business still offered enough room for growth. Although export business during the first three quarters of 2016 was slow, Po said there was a spike in original equipment manufacturer (OEM) tuna business toward the end of the year.
As a result of the uptick, the company was still planning to sell its tuna products to the major brands in the United States, Europe and Japan. —DORIS DUMLAO-ABADILLA AND ODELINNE JAN LINA
