Cost pressures hit Century Pacific Food profit

The country’s leading canned food producer Century Pacific Food Inc (CNPF) booked a 4-percent drop in net profit last year to P2.55 billion as the uptick in cost of raw materials relative to cyclical lows gnawed on margins.

Consolidated revenues, however, grew by 22 percent to a record-high P34.5 billion on robust growth across all business units throughout 2017, CNPF disclosed to the Philippine Stock Exchange on Wednesday.

For the full year, CNPF’s branded business registered an 18-percent increase in sales to P24.9 billion, with all three units—marine, meat and milk—posting double-digit revenue growth.

Sales of white-label products to overseas companies, which resell these under their own brands, likewise surged by 34 percent to P9.6 billion, as the tuna segment benefited from increased export activity and higher average selling prices year-on-year. This segment is referred to as the original equipment manufacturer (OEM) business.

“Amid a more challenging input cost environment, our businesses fared relatively well. During this time, we’ve adopted a more conservative approach towards price increases in the face of inflationary pressures. This has helped further solidify our market shares, increase sales volume, and puts us in a good position to benefit once raw material prices soften,” said CNPF executive chair Christopher Po.

Po noted the sustained demand for CNPF’s products across all segments.

“Our tuna OEM business performed well in 2017 owing primarily to the recovery of the global tuna market. OEM coconut also achieved key product diversification milestones during the year. For our branded segments, we saw consistent revenue expansion in core units and an increased presence in emerging categories,” Po added.

In terms of profitability, CNPF’s gross profit was down slightly to P8.52 billion. Operating income was also down by 5 percent to P3.43 billion.

“Though headwinds coming from cost pressures are likely to remain in the early part of 2018, we have already seen softening in the prices of raw materials and look forward to an improvement in margins beginning middle of this year. Meanwhile, we are focused on keeping expenses low and ensuring that our buoyant top line growth continues,” said Po. —DORIS DUMLAO-ABADILLA