Concepcion unit targets 20% sales growth in 2014

The arm of listed Concepcion Industrial Corp. (CIC) engaged in sales and maintenance of building and industrial products aims to grow revenues by a fifth this year, with the newly acquired, higher-value elevator and escalator business expected to jack up sales.

CIC’s Building and Industrial Solutions (BIS) unit also sees its share vis-à-vis the company’s residential solutions segment rising to 50 percent in three years from just 15 percent at present as the wider product lineup would accelerate pickup of bundled solutions.

Rajan Komarasu, CIC BIS group director, said in a briefing Thursday that the commercial unit’s revenues were projected to rise 20 percent this year from P1.4 billion last year, on the back of the boom in the country’s construction sector.

“The construction industry is growing 11 percent; we want to go higher than that,” Komarasu said, noting that government data show that an average of 14 million square meters of space annually were registered for construction permits during the past three years.

The growth in residential, commercial and industrial construction augurs well for their business, he said.

The product lineup of BIS includes heating, air conditioning and refrigeration systems under the Carrier and Toshiba brands, as well as people-moving solutions under the Otis brand.

CIC last month announced its joint venture with US conglomerate United Technologies Corp. (UTC), under which the former acquired 51 percent of elevator and escalator solutions provider Otis E&M Co. Philippines Inc.

Compared with CIC’s residential solutions segment, BIS has lower unit-sales volume but generates higher value as it also offers installation and maintenance services.

A basic escalator, for instance, already costs $30,000-50,000, on top of “competitively priced” installation and maintenance fees, Otis Philippines general manager Sean Losty said.

In the medium term, it is possible that the BIS would grow its share to half of CIC’s sales volume mainly with the acquisition of Otis, said Komarasu, who is also the chief executive of Otis Philippines.

At present, Otis has a high single-digit share in the domestic people-moving business, but CIC targets to triple the market share in the next three years, he added.

The sprouting shopping malls as well as industrial zones and factories are growing markets for bundled and customized end-to-end business and industrial solutions, Komarasu said.

CIC is also looking at offering fire safety and security systems in the future, although “plans are not crystallized yet,” he said.