PCPPI earmarks P3.5B for capex

MANILA, Philippines—Beverage-maker Pepsi-Cola Products Philippines Inc. (PCPPI) sees business sustaining a double-digit growth this year, thus requiring fresh capital outlays of around P3.5 billion to expand business lines.

While the local beverage industry would likely grow by 6-7 percent this year in line with the economic growth trajectory, PCPPI was hoping “to do better than that,” company president Partho Chakrabarti told reporters on Tuesday.

“I believe 2014 will also be good year partly because in 2013, which was an election year, the industry didn’t register a spike. (We had) a very modest growth, so I don’t think we’re lacking industry growth,” Chakrabarti said.

“Normally, growth slows down after an election year but that won’t be the case for 2014,” Chakrabarti said. Apart from the base effect, he said: “I think for 2014 we have good economic growth consumption.”

Asked whether the unusually cold weather early in the year would gnaw on sales, Chakrabarti said this would be evened out when the hot months come in.

Typically, beverage sales grow faster when the weather is warmer.

“There are so many places where our products are not yet present … weather should not bother us at this stage,” he said.

This year, Chakrabarti said PCPPI would spend around P3.5 billion to increase production lines. This is in line with the company’s P3 billion to P4 billion average annual capital spending budget.

He said that at any point in time, PCPPI would like to have a 20 percent manufacturing headroom, which meant it should be able to meet demand for volume of as much as 20 percent. At present, Chakrabarti said PCPPI’s production plants were already operating at a “pretty high” utilization rate. “Because of the rapid growth, we will be having this capex budget.”

PCPPI’s gross sales revenue reached P6.1 billion in the third quarter of 2013 and P19.4 billion in the first nine months, marking growth of 16 percent and 17 percent, respectively.

Non-carbonated beverages currently account for about 30 percent of PCPPI revenue but the company sees this share rising to half of the business in three to five years.