Century Pacific profit likely 19% up last year

CENTURY Pacific Food Inc., the listed subsidiary of the Century Pacific Group (CPG), likely ended 2023 with a double-digit profit growth thanks to a “solid” fourth-quarter performance aided by improved commodity prices, the Maybank Investment Banking Group said.

Maybank, in a recent report, predicted a top line that would “fall within the guidance of a high single digit,” anchored on the company’s resilient branded business and original equipment manufacturing (OEM) segment’s low base.

This, along with quarter-on-quarter margin improvement from improving commodity costs, “should bring [Century Pacific’s] FY23E (fiscal year 2023 estimate) net income growth to 19 percent,” Maybank said.

Century Pacific saw its third-quarter net income grow 12.6 percent to P1.43 billion last year from P1.26 billion in 2022, largely on resilient domestic consumer demand. Full-year results are expected to be released in April.

The brisk growth pace will likely be sustained this year, Maybank noted, as the Po-led firm’s product portfolio consists mainly of essentials while falling input prices should help expand margins, providing an added boost.

Raw material costs have stabilized since the third quarter of last year, resulting in a product mix that favors the branded business, the report noted.

This would have helped the company maintain a gross profit margin (GPM) of 24.2 percent in the final quarter, it added.

Century Pacific is forecast to continue benefiting from this trend, with GPM seen increasing to 24.6 percent and 25.1 percent this year and next, respectively, supported by declining prices of tuna, meat, and dairy.

The company manufactures Century Tuna, Coco Mama, Birch Tree, Argentina corned beef and Ligo sardines, among others.

“With Century Pacific’s pre-emptive inventory strategy of two to six months, we believe risks are skewed to the upside on further margin accretion from its emerging dairy, meat alternative, and pet food businesses,” Maybank said.

The investment bank also expects a 9.0-percent compound annual growth rate (CAGR) in revenues over the 2022–2025 period, driven by doubledigit growth in emerging businesses and sustained improvements in core branded products.

Potential risks to growth, meanwhile, include higher raw material costs, material depreciation of the Philippine currency, and stiffer competition in the branded categories business, Maybank added.

Shares in Century Pacific closed down 0.57 percent to P34.70 each last Friday.

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