By Arra B. Francia, Reporter
CENTURY Pacific Foods, Inc. (CNPF) is spending up to P1.8 billion this year to expand its capacity, as it expects earnings to grow in single digits due to the rising costs of fuel and raw materials.
“Capital spending will be roughly around P1.5 billion to P1.8 billion this year. The vast majority of that would be for capital expenditures for capacity expansion,” CNPF Executive Chairman Christopher T. Po said in a press briefing after the company’s annual shareholders’ meeting in Ortigas Center on Tuesday.
The 2018 capex is higher than the P1.1 billion to P1.5 billion it committed to spend in 2017.
Mr. Po said the company is expanding its tuna facility as it is already operating at full capacity with 300 to 350 metric tons of tuna produced per day.
“We think the efficient scale for a new plant would be 50 to 100 metric tons of tuna produced a day. Once we finish this plant, it will satisfy our requirement for the next three to five years,” Mr. Po said.
The new tuna facility in General Santos City is expected to be completed by the third quarter of 2019.
The expansion will help support CNPF’s growth targets in the next few years, as it plans to grow the business by 10-15% in the next five to 10 years.
This year, the company expects revenue growth to be in the teens, despite the peso depreciation, rising interest rates, and commodity prices putting a drag on its bottomline figures.
CNPF’s net income this year is projected to grow in the mid-single digits. In the first quarter, the company’s attributable profit grew by 4.42% to P732 million.
“These cycles come and go every four to five years. It’s just that now, they’re all happening at the same time, the weak peso, higher interest rates, higher commodity prices, so there’s a little bit of a new challenge, but we’re managing,” Mr. Po said.
Softer prices in the tuna sector has also helped boost demand for the company, as the segment accounts for 40-50% of the business.
“Other prices are going up, but tuna prices have actually softened. So that’s been a welcome development,” Mr. Po said.
Despite the various cost pressures the food manufacturing industry is experiencing, the company is carefully timing any price increases for its products.
“For as long as we can, we look for a different way to economize by finding efficiencies, investing in machines, capex, in some ways even reformulating to bring down the price and make it more affordable… But there’s a portion there’s nothing else you can do, so you have to find opportunities to pass on (costs),” Mr. Po said.
Meanwhile, CNPF said it is currently in talks with the Department of Labor and Employment on the regularization of its employees.
The company was part of the Labor deparment’s list of firms that voluntarily submitted commitments to regularize their employees by the end of the year.
“We are in the midst of discussions as to what percent of the work force should be part of the company as opposed to outsourced… Nothing definitive at this point, but we are pretty confident that we can come up with a win-win type of arrangement,” Mr. Po said.
Shares in CNPF slipped eight centavos or 0.5% to close at P15.92 each at the stock exchange on Tuesday.