Century Pacific Food Inc (CNPF), one of the Philippines’ leading food companies, saw consolidated revenues increase 15% year-on-year in 2018, driven primarily by the strong growth in branded sales.
CNPF ended the year with record-high revenues of Php37.9 billion with branded accounting for 74% of total, equivalent to Php28.0 billion in sales.* This translates to a 20% increase year-on-year in branded with all three subunits of marine, meat, and milk registering higher sales on an expanding base.
“Despite some headwinds last year in consumer sentiment due to inflation, demand for our products remained robust – exhibiting even faster than expected growth,” said Oscar Pobre, CNPF’s Chief Finance Officer.
He added, “Sales volumes sustained their upward trend in an environment of relatively high food prices which highlighted the affordability and quality of our products. Moreover, the Company’s initiatives to improve distribution and availability – especially in Visayas and Mindanao – allowed us to deliver better performance in provincial areas. This, combined with continued investments in our brands, helped strengthen our market positions in both core and emerging categories.”
Meanwhile, revenues from the OEM units totaled Php9.9 billion, equivalent to 26% of Company-wide sales. This represents a more tempered increase of 4% year-on-year with the normalizing of pass-on prices in tuna and coconut.
In terms of profitability, earnings before interest, taxes and depreciation or EBITDA stood at Php4.5 billion, bringing year-on-year growth to 14%.
EBITDA margins were fairly steady at 11.9%, down by only 10bps, in spite of the local inflationary environment and rise in operating costs.
“Our margins in 2018 remained flattish year-on-year thanks to our diversified business, with softer input prices in certain parts of the portfolio offsetting pressure from other raw materials and packaging costs,” said Pobre.
He added, “On operating expense however, higher fuel prices and faster growth in farther flung areas translated to increased freight and logistics costs. Nonetheless, we are quite pleased with our overall performance this 2018, posting decent earnings growth relative to a more challenging 2017.”
CNPF ended 2018 with an 11% increase in net income, sustaining a positive earnings momentum throughout the year. This brought audited consolidated earnings to Php2.8 billion and net income margin to 7.5%.
The Company’s double-digit growth in audited net income surpassed its earlier disclosed unaudited earnings growth of 9%.
“We are tagging 2019 as our year of innovation with the introduction of a number of new products in our pursuit of long-term and sustainable growth. We will also continue investing in our people, brands, facilities, and supply chain, alongside an enterprise-wide initiative to monitor and measure environment, social, and governance metrics as well,” said Pobre.
As of end-2018, CNPF also maintained its healthy balance sheet with leverage ratios allowing for continued flexibility. Net gearing stood at 0.3x, while net interest-bearing debt to EBITDA was at 1.0x.
The Company’s return on equity likewise remained steady at 18%.
*Audited and adjusted for IFRS 15 (Revenue from Contracts with Customers)