Axelum warns revenues may dip this year
AXELUM Resources Corp. expects sales volume of coconut water to increase this year, although overall revenues may slump due to lower global prices for coconut oil.
“The volume is increasing. We sold about 25 million liters of coconut water in 2018. We’ll have about 27-28 million liters this year,” Axelum President and Chief Operating Officer Henry J. Raperoga told reporters on the sidelines of an investors’ briefing in Makati yesterday.
Coconut water accounts for about 20% to 30% of the company’s business.
The integrated coconut product manufacturer is banking on the rising market for coconut water to support its growth in the following years. Citing a study by the University of Asia and the Pacific (UA&P), Axelum said coconut water is expected to grow between 12-20% from 2019 to 2023, driven by new product developments.
Axelum supplies coconut water products to a number of global brands such as Vita Coco, Kirkland, and Fiesta.
The same UA&P study showed that desiccated coconut, which accounts for about 30-40% of Axelum’s sales, is forecast to grow by 8.6% during the same period, fueled by increasing health consciousness of consumers.
Despite the volume growth, Mr. Raperoga said they may see a slight dip in revenues in 2019, compared to P5.88 billion in sales last year.
“I think it will be a little bit lower than that because of the lower prices (for coconut oil), but the volume should grow,” Mr. Raperoga said.
“It’s because of the global market. The desiccated coconut is a traditional product, and the price of that is affected by the global oil prices, where coconut oil is actually benchmarked, so pag bumabagsak, nasasama siya (so when that declines, it is affected).”
The Axelum executive, however, noted that only desiccated coconut is affected by movements in the global market.
Axelum is also working on expanding its distribution network by entering new markets both locally and internationally.
“In the Philippines, we are only selling products in Metro Manila and parts of Luzon. We plan to expand to the Visayas and Mindanao by appointing distribution partners in key cities,” Mr. Raperoga said.
Overseas, Mr. Raperoga said they are planning to set up a distribution hub in Portland, similar to their facilities in Atlanta and Melbourne, to reach the West Coast, Canada, South America, and Europe.
The top executive also said there are opportunities to acquire companies that would expand Axelum’s footprint, noting that they have been approached by a firm in Vietnam and two in the Philippines for potential deals.
Axelum is in the process of conducting its initial public offering, where it will offer up to 1.13 billion shares to the public priced at up to P6.81 each. The company could raise a maximum of P7.695 billion from the offering, which it plans to use for further expansion.
The company will release the final offer price by Sept. 20, with the offer period to run from Sept. 24 to 30. Its shares will then be listed on the main board of the stock exchange by Oct. 7. — Arra B. Francia