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Century Pacific Food Posts Solid Q3 Growth, But Working Capital and Margin Pressures Loom


Century Pacific Food, Inc. (PSE: CNPF), one of the country’s leading branded food manufacturers, reported strong third-quarter results, with consolidated revenues and earnings accelerating on the back of robust branded segment growth. However, the company faces emerging financial and operational risks tied to margin compression, working capital strain, and export volatility.

Earnings Surge Amid Branded Segment Strength

For the nine months ended September 30, 2025, CNPF posted ₱61.79 billion in revenues, up 8.5% year-on-year, while net income rose 9.6% to ₱5.78 billion. Earnings per share climbed to ₱1.63 from ₱1.49 last year.
Third-quarter performance was even stronger, with revenues jumping 14.9% to ₱22.07 billion and net income up 14.8% to ₱1.89 billion, signaling accelerating momentum in branded categories such as marine, meat, and dairy.

Management attributed the gains to double-digit volume growth in branded products and improved consumer purchasing power amid stable inflation. Meanwhile, OEM exports (tuna and coconut) softened by 5% year-to-date but showed signs of recovery in Q3 as global trade conditions stabilized.

Risk Areas Identified

Despite the upbeat earnings, the report reveals several vulnerabilities that investors should monitor:

  1. Working Capital Pressure

    • Trade receivables surged 30% to ₱13.95 billion, while advances to suppliers more than doubled (+118%).
    • Operating cash flow fell sharply to ₱2.97 billion from ₱4.87 billion last year, reflecting heavier working capital requirements.

  2. Margin Sensitivity

    • Gross margin contracted 110 basis points to 25.5%, driven by higher input costs.
    • While operating expenses were trimmed to offset some pressure, commodity price volatility and FX risk remain key threats.

  3. OEM Export Volatility

    • Tuna and coconut exports declined 5% year-to-date, exposing CNPF to global trade uncertainties and demand cycles.

  4. Debt Maturity Concentration

    • Short-term notes payable ballooned to ₱4.02 billion from ₱200 million, with ₱4.0 billion due within 12 months.
    • Although gearing remains low at 0.19x, refinancing risk could rise if liquidity tightens.

  5. Inventory Build-Up

    • Inventories climbed nearly 9% to ₱20.24 billion, extending the cash conversion cycle to 80 days, which could increase exposure to obsolescence and price swings.

Capital Allocation and Outlook

CNPF declared ₱1.10 per share in dividends (₱0.55 regular and ₱0.55 special), representing a 61% payout ratio. Capital expenditures reached ₱2.2 billion, including plant upgrades and the acquisition of U.S.-based plant-based brand Loma Linda, reinforcing its health and wellness portfolio.

Looking ahead, management will need to balance growth investments with tighter working capital discipline and margin protection. The company’s ability to manage input cost volatility, normalize cash flows, and sustain branded momentum will be critical as it navigates global trade uncertainties and domestic inflation risks.

Bottom Line: Century Pacific Food delivered strong Q3 earnings and revenue growth, but rising working capital needs, margin compression, and short-term debt obligations underscore the importance of disciplined financial management in the coming quarters.

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