CIC investing billion in 3 years, creates technology arm

Concepcion Industrial Corp. (CIC), the country’s leading provider of air-conditioning solutions and home appliances, is looking at capital expenditures (capex) of about 1 billion pesos over the next three years as it embarked on technology-driven solutions to push for more growth amid a robust domestic market.

Raul Joseph A. Concepcion, chairman, CEO and president of CIC, said the company is spending between R250 million to R300 million this year alone.

On top of this capital expenditure, CIC is investing R50 million to R80 million for its newly formed Cortex Technologies Corp., its third leg in the business to drive innovation across the organization.

CIC registered gross revenues of R13.859 billion in 2017 or 12 percent higher than the R12.342 billion in 2016.

In creating a wholly-owned technology arm Cortex, Concepcion said the new subsidiary will create rapid innovations across CIC companies on ideation, design, development and commercialization of internet of things (IoT) solutions for the consumer, commercial and industrial sectors.

“We live in exciting times, consumers are changing and evolving so we also need to evolve to remain relevant in the market,” Concepcion said stressing this requires them to do things differently by innovating and creating new solutions using technology as a leverage.

Already, Cortex has collaborated with sister company ConcepcionCarrier Air Conditioning Co. (CCAC) to develop the Carrier Smart+Cool System to bring the practical benefits of smart air conditioning to the mainstream market.

Concepcion said they plan to launch Cortex by April this year. This technology will allow consumers to buy brand new units of window-type Carrier airconditioning units, which are equipped with a control gadget that will manage energy consumption and track real time usage.

Eventually, the gadget can be provided by the company to existing Carrier inverter aircon users that they can install to manage their power consumption.

Concepcion said that this energy management tool would be able help conserve energy efficiently, resulting in as much as 40 percent or R27 a day aircon consumption as against the traditional air cooling system than costs R54 a day.

CIC has come up with this innovation as they noted that the cost of the airconditioning unit is not actually the major hurdle because it is a one-time expenditure, but the power consumption in the use of the equipment.

Sean Byrne, CEO of Cortex Technologies, said this cost issue on power consumption from the use of airconditioning will be addressed by its smart cooling system.

There are an estimated 2-3 million households with airconditioning units, but there is a bigger 23 million Filipino households with no airconditioning at all.

This is the segment in the consumer sector that CIC is targeting to have stronger presence initially for its Cortex smart cooling technology.

With this innovation, consumers with window room airconditioners can enjoy easy home management as they start to have more control over their electricity bill and enjoy total convenience.

“We feel that by giving these features we will make the life of Filipinos much simpler and easier life because the product becomes more affordable,” said Concepcion.

At present, the building and industrial cooling solutions account for 35 percent of business and 65 percent the consumer or retail segment.

“Both segments have accelerated growth,” he said. He attributed the strong domestic growth to the growing population, rising purchasing power, combined with the current administration’s socioeconomic agenda saying all these will require sustained investment in railroads, highways, bridges, ports, airports, water, energy and telecommunications.

“All these factors will fuel demand for airconditioning systems and services,” Concepcion said.

The appliance business under the brand Midea contributes for a smaller 5 percent, but CIC expects growth to accelerate. (BCM)