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Century Pacific sees income doubling in 2014

Century Pacific Food Inc., the country’s leading canned seafood, meat and milk producer, is expected to double its net income to range of P1.17 billion to P1.51 billion next year from the forecast P744 million for 2013.

According to a study by First Metro Securities, earnings will come from revenues to P21.46 billion in 2014 from the expected revenues of P19.02 billion this year.

First Metro said Century Pacific’s higher profitability is seen to be boosted by lower debt, higher efficiency and cost savings that will lead to higher margins, as well as sales growth.

Century Tuna’s debt is expected to decrease from P2.72 billion to P1.43 billion after repayment of short-term debt of P1.29 billion (42.30 percent of its P3.16 -billion initial public offering proceeds).

First Metro said demand for canned and preserved food is seen to be stable in the next few years as households (especially in the low-income segment) still rely on canned products.

Volume consumption, however, may slow down on account of product maturity, as well as increasing costs in production (i.e. packaging costs). This will be offset by Century Pacific’s plan to put up its own tin can factory that will supply about 25 percent of its requirements.

DA Market Securities said this will allow the company to improve its profit margins by sourcing the tin cans at cost and reducing logistics costs associated with purchasing from third party suppliers.

The company is also aiming to expand distribution in both modern and traditional retail segments.

DA Market Securities said the firm’s “extensive distribution network, which currently reaches all major cities in the country, to further increase directly-served points of sale by 11 percent from 225,168 to 250,000 by 2014.”

In addition, CNPF is also looking to penetrate several areas in Visayas and Mindanao which are currently dominated by localized players. Continued penetration into the food service segment will also be a key driver in widening its product portfolio.