CIC expects single-digit growth amid challenges

CONCEPCION Industrial Corp. (CIC) is looking at a single-digit growth in both earnings and revenues for the year, calling 2018 an “even more challenging year than 2017” due to inflationary pressures and the weakening peso.

“I think economy-wise, it will be even more challenging, with the full effect basically of inflation going up, continued peso devaluation,” CIC Chairman and Chief Executive Officer Raul Joseph A. Concepcion told reporters after the company’s annual shareholders’ meeting in Makati City yesterday.

Mr. Concepcion noted higher inflation — which accelerated to a fresh five-year high of 5.2% in June — may affect consumer spending over the near future.

“But as a company, we still look at single-digit growth,” he said.

The listed firm, which supplies air- conditioners, air- conditioning solutions, and refrigerators under the Carrier, Toshiba, Condura, and Kelvinator brands, was able to sell over a million appliances in 2017. CIC expects sales to grow in the teens for this year, as it introduces new products in the refrigeration and washing machines category.

“A lot of the things to make sure that we are strong is to keep on introducing new products. We had 25% more SKUs (stock keeping units) last year. This year, another 25% in terms of new product launches,” Mr. Concepcion said.

To support the introduction of new products, CIC plans to invest between P150 million to P200 million to expand capacity in existing plants.

CIC manufactures a select range of its air-conditioners inside a factory in Light Industry and Science Park, where it produces 500,000 air-conditioning units a year. It also has a manufacturing facility for refrigerators, with a capacity of 300,000 units per year.

To- date, Mr. Concepcion said the facilities’ utilization rate is at 70- 80%. Should sales continue to grow at a pace of 15-20% in the coming years, the company’s manufacturing facilities are expected to be fully utilized soon.

Since the Philippine peso has been depreciating, the CIC official noted local manufacturing has also become more competitive. With this, the company is looking at locally producing some products that they used to import.

“With that, if you look at the horizon demand, penetration level, the capacity of our plants are not sufficient to handle that. So as early as now we are investing,” Mr. Concepcion said.

CIC reported on Wednesday that sales grew by 14% in the second quarter, while profit after tax after minority interest (PATAMI) went up by 12%.

“It’s partly because you have price increases, but the big part is demand of the consumers as well as operational efficiencies, new products that we’re doing,” Mr. Concepcion said.

Shares in CIC gained 20 centavos or 0.37% to close at P53.95 each at the stock exchange on Wednesday.