PEPSI-COLA Products Philippines, Inc. (PCPPI) hopes to book better volumes this year as it recovers from the implementation of higher taxes on sugar-sweetened beverages (SSB) in 2018, while also accelerating spending to support this growth.
PCPPI Senior Vice-President for Operations Allan A. Frias II said the company is on track in achieving its internal goals for this year, while declining to disclose actual figures.
“This year is better than last year. We’re already in the recovery phase…We have set a certain goal for this year. We are on track. Hopefully we can beat that, to recover and increase our sales than last year,” Mr. Frias told reporters during the launch of its sustainability report in Taguig on Wednesday.
Beverage manufacturers generally posted a decline in volumes last year as the newly enacted Tax Reform for Acceleration and Inclusion law imposed higher taxes on SSBs. Drinks containing caloric or non-caloric sweeteners were slapped with an excise tax of P6 per liter, while those containing high-fructose corn syrup will now carry an excise tax of P12 per liter.
With this, the company recorded a net loss attributable to the parent of P199.54 million in 2018, against an attributable profit of P541.33 million in the previous year. Costs of goods sold jumped 21% to P27.88 billion, offsetting the seven percent increase in gross sales to P38.44 billion.
PCPPI’s brands include Pepsi, Mountain Dew, 7 Up, Mirinda, Gatorade, and Lipton. Sales from beverages comprise 98% of the company’s total revenues, while the remaining two percent comes from the food segment.
Mr. Frias added they will be increasing their capital expenditures this year compared to 2018’s P2-billion spending, as the firm will be investing more to meet the higher volumes.
“We have much better (capex) than last year. Because of the lower volume last year we needed to also trim down our expenses, whether it’s day-to-day expenses or investments because we are uncertain of the impact of the TRAIN law,” Mr. Frias explained.
The company also unveiled on Wednesday its first sustainability report that focuses on five performance measures, namely water use, electricity use, fuel consumption, solid waste management, and community building.
By 2020, PCPPI hopes to reduce water usage by 10%; improve electricity use by five percent; improve fuel consumption by five percent; improve recycling by 85%; and conduct social responsibility initiatives through management systems and community volunteerism projects.
In 2018 alone, the company said it saved P108 million on power cost due to internal and supplier energy initiatives. It also saw P23 million in savings from packaging innovations.
Shares in PCPPI jumped 4.08% or six centavos to close at P1.53 apiece at the stock exchange on Wednesday. — Arra B. Francia
