• CIC to spend close to P10B for acquisitions

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    REFRIGERATION and air-conditioning specialist Concepcion Industrial Corp. (CIC) is programming close to P10 billion for the acquisition of local companies engaged in the appliance business over the next five years.

    In an interview after its stockholders’ meeting held in Makati City, Raul Joseph Concepcion, CIC’s chief executive officer, said the company is currently in talks with some Philippine firms for possible acquisition.

    “We are looking at acquiring companies out there. We are speaking with some companies for possible acquisitions. This move is mainly for the purpose of expanding our business and completing our product line for our customers which are both consumers and industrial,” Concepcion said.

    He said the company is willing to spend the whole amount of nearly P10 billion in a one-time transaction or in a “series of transactions” depending on the terms and conditions of the deal.

    “Our yearly capex [capital expenditure]is internally funded, but for our planned acquisitions we are going to source it externally to take advantage of the very low interest rates. Borrowing now is very cheap,” he added.

    Known for its Carrier and Condura, Kelvinator, and Toshiba brands, listed CIC is spending between P150 million and P200 million in capital spending this year, and would be allocating roughly the same amount annually in the next five years.

    “The almost P10 billion which we plan to spend for acquisitions is on top of the yearly capex,” Concepcion explained.

    CIC expects its business to expand fivefold over the next five years “in terms of sales and profitability. This growth expectation includes seeing sales surging within the vicinity of P50 billion by year-end of 2020,” he said.

    For the year, they project business to grow by 25 percent driven by strong demand from the country’s growing middle-income earner segment.

    “Our initial guidance is 15 percent for the year. I think it will be better than that both for the top line and bottom line. I think our growth rate this year will be closer to 20-25 percent or maybe higher because the economy is very good,” the executive said.

    For the first quarter, CIC reported that net earnings soared 50 percent to P180 million on strong consumer spending.

    “We would definitely beat our 15 percent guidance for the whole year as our first-half result is already trailing around 20 percent. Our profitability, however, is a bit behind our sales. But both [sales and profits]are really growing,” Ma. Victoria Betita, the company’s chief finance officer, said.

    For 2015, CIC reported net income of P661 million, up 3.5 percent from the previous year, while sales likewise increased 15 percent to P10.6 billion.

    Betita added that CIC is also looking at building its maintenance and repair service arm as an alternative source of revenues “whenever consumers are not into buying mode.”

    “A service business would help us in terms of revenues when the decision to buy is low. Repair business would pull us up a little more,” she said.

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