Century Pacific Food, Inc. (CNPF) reported a 46.2% drop in third-quarter attributable net income to P1.02 billion from P1.89 billion a year earlier, as elevated expenses and a heavier income-tax burden eroded earnings despite continued revenue growth.

For the July-to-September period, the listed food manufacturer posted consolidated revenues of P24.62 billion, up 11.6% from P22.07 billion in the same quarter last year, according to its quarterly disclosure to the Philippine Stock Exchange on Thursday.

Gross expenses rose 10% to P21.81 billion from P19.82 billion, while income tax expense climbed 70.5% to P689.2 million from P404.2 million. Income before tax consequently declined 25.6% to P1.70 billion from P2.29 billion.

Nine-Month Performance

CNPF's attributable net income for the first nine months of 2026 fell 10.8% to P5.16 billion from P5.78 billion, weighed down by losses from the June earthquake that affected its General Santos facilities, along with higher finance costs and increased income taxes.

Consolidated revenues rose 14% to P70.5 billion over the January-to-September period, supported by growth in the branded food and export businesses. Excluding one-time earthquake-related losses, core net income after tax grew 10% year on year.

The company recognized P1.2 billion in earthquake-related charges during the nine-month period and said insurance recoveries for the affected facilities and inventory are expected to be recognized in future periods.

Segments and Margins

The branded segment, which accounts for most of CNPF's sales, grew 12% during the nine months, underpinned by demand across its marine, meat, milk, coconut, and emerging product categories. Sales from the original equipment manufacturer (OEM) Exports business rose 21% from a low base, aided by long-term contracts and demand in key markets.

Gross profit margin improved 10 basis points to 25.6%, while operating expenses as a percentage of sales declined 30 basis points to 13.9%. These improvements drove a 20% increase in operating income before earthquake-related losses; after the P1.2-billion charges were recognized, reported operating income rose by only 4%. The gap illustrates how a single one-off charge can obscure underlying operating momentum.

June Earthquake

A magnitude 7.8 earthquake struck off Sarangani province on June 8, causing damage in General Santos City, where CNPF operates production facilities.

"Operations fully resumed by the start of the third quarter, with no permanent impairment to the Company's production capabilities. These facilities and inventory are covered by insurance," the company said.

Beyond the earthquake-related losses, higher finance costs and effective income tax rates also weighed on earnings. CNPF attributed the larger tax burden to the expiration of tax incentives, while finance costs increased alongside higher borrowings. Tax incentives typically lower the rate applied to qualifying income, so their expiration lifts the effective tax rate even when underlying operations are unchanged.

Management Commentary

Chief Financial Officer Chad Manapat said the company navigated geopolitical uncertainties, inflationary pressures, subdued consumer sentiment, and natural calamities during the period.

"All things considered, we remain grateful for the results we have achieved thus far. Our diverse portfolio and healthy balance sheet have kept us resilient, allowing us to maneuver through headwinds while continuing to invest in our long-term growth," he said.

Capital Spending and Outlook

CNPF has allocated approximately P8 billion for capital expenditures this year, of which P5 billion had been deployed as of end-September. The spending is primarily intended to expand its coconut processing facilities and to build new facilities for its dairy and pet food businesses.

Mr. Manapat said CNPF aims to sustain double-digit revenue growth for the full year, although core earnings growth is expected to be slower. "While much uncertainty remains, we aspire to close the year with our double-digit growth trajectory intact for our topline, with core bottomline growth trailing," he said.

The company is likewise preparing for potential El Niño-related disruptions and supply chain risks as it seeks to maintain production and distribution continuity. For 2027, CNPF plans to continue expanding production capacity and investing in its brands and operations. Developments to track in upcoming results include the timing of the earthquake-related insurance recoveries, the deployment of the remaining roughly P3 billion in this year's capex budget, and any supply-chain effects from El Niño.

"With additional capacity coming online and continued investments in our brands and operations, we remain cautiously optimistic about our growth prospects. Ultimately, we aim to sustain this momentum, all in service of our mission to deliver affordable nutrition to Filipino families," Mr. Manapat said.

CNPF's portfolio includes Century Tuna, Argentina, 555, Ligo, and Birch Tree. The company also supplies private-label tuna and coconut products for export.

— Alexandria Grace C. Magno

Source: bworldonline.com