Century Pacific lowers capex spending to P2B for 2022
Century Pacific [CNPF 22.00 1.15%] [link] said that it was reducing its capex budget for 2022 by 20% to P2.0 billion, down from P2.5 billion in 2021, in order to “save some bullets now for the future” when inflation is less of a factor.
CNPF said that three straight years of “double-digit growth” required the company to focus on developing new capacity and new product lines to grow its top-line sales, but that it is now focused on supporting the product lines that are already in place during this period of high inflation.
The company said that it has started raising prices to partially off-set the impact of rising costs, and that this should allow CNPF to post top-line double-digit growth for the year.
CNPF said that it is not passing the entire burden of the company’s higher cost profile on to consumers all at once; it’s introducing higher prices in a more subtle manner to prevent CNPF customers from becoming explicitly aware of the price increases and leaving the brand for cheaper substitutes.
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Unless the consumption is status-driven (like cars, watches, handbags), Filipinos are very cost-conscious and will select products more readily based on price rather than remain loyal to a more-expensive brand.
This has caused many in the processed food business to eat enormous costs through the pandemic, and now through this inflationary period.
CNPF was one of the lucky ones that actually managed to receive a consumption bump thanks to all the prepper shelf-stocking we did during 2020, and all of the “down-shifting” consumers did from take-out to home-prepared meals that we did during the latter part of 2020 and all through 2021.
But the fact is that even CNPF is watching its margin get consumed by higher input prices that it feels nervous to pass on to consumers.
It’s worrying to see CNPF cut its capex this year, because that’s what companies do when they look into the future and see extended periods of economic weakness.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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