concepcion industrial corporation (“cic”)...
TRANSCRIPT
Concepcion Industrial Corporation (“CIC”)
Presentation November 2014
TODAY’S PRESENTERS
2
Raul Joseph A. Concepcion – Chairman, Chief Executive Officer and President
Over 25 years of experience with the Concepcion Group
President of Concepcion-Carrier Air Conditioning Company (“CCAC”) and CIC
Chairman Emeritus of the Philippine Appliance Industry Association
Holds a Business Administration Degree from Simon Fraser University
Ma. Victoria A. Betita – Chief Finance and Information Officer
Over 6 years of experience with the Concepcion Group
Head of Corporate and Business Services of CCAC
Holds a B.S. Management Engineering degree from the Ateneo de Manila University and a Masters
in Business Management from the Asian Institute of Management
Mary Grace Z. Velasco – Vice President
Over 10 years of experience in investor relations, corporate planning and financial advisory.
Head of Investor Relations and Corporate Planning of CIC
Holds a Bachelor of Science degree in Business Administration, Major in Finance and Economics,
from Fordham University
TABLE OF CONTENTS
1. Company Overview
2. Strategy
3. 2014 Key Programs
4. Q3 Performance
5. YTD 2014 Performance (as of September 2014)
6. Guidance
7. Appendix
3
OVERVIEW
Company Overview
Ownership 60% 100% 40% 51%
Products &
Services
Airconditioning
& Refrigeration
Residential
Refrigeration
Consumer
Appliances
Elevators
& Escalators
Holding
Company
Entity
5
• Over 50 years in the industry
• Combined annual sales of Php 7.6 billion (FY13)
• Market leader in air conditioning and domestic refrigeration segments
• Largest air conditioner and refrigerator manufacturing facilities in the Philippines
• Broad range of products
• Market leading brands
• Established nationwide sales and service network
Company Overview
Ownership 60% 100% 40% 51%
Products &
Services
Airconditioning
& Refrigeration
Residential
Refrigeration
Consumer
Appliances
Elevators
& Escalators
Holding
Company
Entity
6
Brands
• Owned by the family of Raul T. Concepcion
• His son Raul Joseph Concepcion is currently
the President of CIC and CCAC
• His son Raul Anthony Concepcion is president
of CDI
Foresight
22.7%
• Owned by the family of Jose S. Concepcion, Jr
• Horizon also owns 20% of RFM Corporation,
listed on the PSE which primarily engages in:
• Manufacturing, wholeselling, distribution and
processing of food products
• In patnership with Unilever Corporation in the
ice cream business - Selecta
Horizons
22.7%
• Owned by the family of Rafael G. Hechanova
and his wife Eumelia Concepcion Hechanova
• His daugther, Renna Hechanova Angeles is
currently the Treasurer of CIC and the Vice
Chairman of CDI
• His son, Rafael C. Hechanova, Jr is currently
the Vice President of Marketing and Business
Development for CIC and CCAC
Hy-land
22.7%
Ownership Structure
68%
7
Proven Track Record Spanning More
Than 50 Years
8
Concepcion Carrier Air Conditioning Corporation Concepcion Durables, Inc. (“CDI”)
Manufactures, sells, distributes, installs and provides comprehensive
air conditioning products and services
Involves in 3 market segments:
Joint Venture with Carrier Corporation1 and a trademark agreement on
Kelvinator2
Joint Venture with Midea to enter into a wider spectrum of the white
goods appliance market
Market leader and largest distribution network in the Philippines
Operates the largest air conditioner manufacturing facility in Philippines
Offers multiple market leading product brands, including:
Manufactures, assembles, wholesells, retails, purchases and trades
refrigeration equipments
Involves in 1 market segment:
Trademark agreement on Kelvinator for the use of certain trademarks
related to Kelvinator brand equipments
Market leader and largest distribution network in the Philippines
Operates the largest refrigeration manufacturing facility in Philippines
Offers multiple market leading product brands, including:
% of Revenue
Product Segments 2012 2013
Residential & Light Commercial 44.5% 51.2%
Commercial & Industrial 18.1% 14.2%
Aftermarket Product & Services 3.6% 3.6%
% of Revenue
Product Segment 2012 2013
Residential & Light Commercial 33.8% 31.1%
Business Overview
% of FY13 Revenue – 70% , PATAMI – 98% % of FY13 Revenue – 30%, PATAM I–10% 9
Largest Manufacturing Facilities in
the Philippines
• 2 Manufacturing Facilities
• Combined Production area:
35,000 sq. m.
• In-house R&D Facilities
• 8 Testing Laboratories
10
Long Track Record of Market Leadership
& Market Leading Brands
11
Extensive Nationwide Sales and
After Sales Footprint
24/7 Customer Care
Nationwide Service &
Install Capability
Highly Trained Service
Technicians
Dedicated Parts Stores
Nationwide Logistic
Network
Nationwide Retail
Coverage
In-store Merchandisers
12
Over 1000+
disers
90% retail
store
coverage
8 parts stores
strategically
located
Nationwide
distribution
Refrigeration
Commercial
System
Light
Commercial
Residential
Carrier Air Cooled Screw Carrier Water Cooled ScrewCarrier Centrifugal Chillers Carrier Tri-Rotor Screw
Carrier Island Freezer Carrier Open Case Carrier Compressors Carrier Condensers Carrier Cold Rooms
Condura
WRAC
Carrier
iCoolCarrier
Optima
Carrier X-
Power
Carrier
Multi-Splits
Toshiba
Hi-Wall Single
Inverter
Toshiba
Multi-Splits
Carrier
Ceiling
Mounted
Carrier Floor
Mounted
Carrier
CassettesToshiba Digital
Inverter
Toshiba VRFMidea VRF
Largest Range of Product Offerings
Airconditioning Refrigeration
13
Concepcion Midea Inc. Concepcion Otis Philippines Inc.
Distibute, installs and service complete line of Midea Appliances in the
Philippines
Midea among one of the larget manufacturers of Home Appliances in
the World
In addition to strengthening CIC’s air conditioning and refrigeration
product lineup, the JV with Midea will primarily allow CIC to enter a
wider spectrum of the white goods appliance market, thereby creating
new revenue streams and realizing further growth potential
Php 27 billion market for other appliances that CIC will pursue
Distributes, installs and services Otis Elevators and Escalators in the
Philippines
Php P 6 billion New Equipment market and highly profitable after Sales
business
Synergy with existing business
Create strategic growth platform
Align with building solutions trends
Leverage on key accounts
Cost & integration synergies
Leverage on construction & service discipline
New Business Overview
14
Joint Venture Signing
November 20, 2013 Office Opening
November 20, 2013
March 28, 2014
Combined Management Strength And
Experience With Proven Track Record Ma. Victoria A. Betita
Chief Finance and Information Officer
with over 20 years of Finance experience
in government and various private sector
industries
Director of Manufacturing and Supply Chain
Management of CCAC with over 15 years
of experience in Manufacturing, operations,
and supply chain management
Director of the Consumer Solutions Group
with over 15 years of multinational
experience in various industries
Director of the Business Solutions Group
with over 20 years of multinational
experience primarily in the HVACR
industry
Rajan Komarasu
Harold Thomas Pernikar, Jr.
Alexander T. Villanueva
General Manager, Concepcion Midea In.
(CMIP) with over 20 years of experience in
Sales and Distribution in various industries
Phillip F. Trapaga
Raul Joseph Concepcion
Chairman, CEO and President of
CIC with over 25 years of
experience in the consumer
durables industry
Treasurer and Vice Chairman of CIC
with over 30 years of experience in
the consumer durables industry
President of CDI with over 20 years
of experience in the consumer
durables industry
Vice President of Business
Development and Marketing with
over 20 years of experience in the
consumer durables industry
.
Renna Hechanova Angeles
Raul Anthony Concepcion
Rafael C. Hechanova, Jr.
15
5,606 6,940
7,588
33.3% 32.0% 32.4%
2011 2012 2013
Profit After Tax / Net Margin (Php Mil)
+9% ▲
647 684
841
391 426 511
11.5% 9.9% 11.1% 7.0% 6.1% 6.7%
2011 2012 2013 2011 2012 2013
Net Sales & Gross Margin% (Php Mil)
Key Financial Highlights
+24% ▲
924 973 1,218
16.5% 14.0%
16.0%
2011 2012 2013
Profit before Tax & PBT% (Php Mil)
+5% ▲
+25% ▲
PATAMI PAT
+6% ▲ +23% ▲
+9% ▲
+20% ▲
16
Earnings Per Share
1.49 1.63
1.95
2011 2012 2013
Based on 261, 244,002 shares
Key Financial Highlights
17
Dec 31, 2013 Dec 31, 2012
Gross Profit Margin (%) 32.4% 32.0%
Profit before Tax % 16.0% 14.0%
Net Income Attributable to
Shareholders (Php million)510.60 426.10
Net Income Attributable to
Shareholders (% to Sales)6.7% 6.1%
Return on Average Equity (%) 28.5% 29.8%
Return on Average Assets (%) 17.0% 15.0%
Earnings per Share (261,244,002 shares)
1.95 1.63
Dec 31, 2013 Dec 31, 2012
Debt to Equity Ratio 0.57 1.46
Asset to Equity Ratio 1.57 2.46
Current Ratio 2.68 1.59
Book Value per Share (261,244,002 shares)
8.75 4.95
For the Period Ending
As of End
STRATEGY Position to capture growth
7.9 8.2
9.7 9.4 9.4
8.7
9.6 9.4
8.6
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14
Philippine GDP Growth (Nominal)
17 19 20 21
23
7 9
11 13
16
2009 2010 2011 2012 2013E
Remittance BPO Revenue
7.4
10.8 10.7
9.6
4.7
8.4 8.9
5.9
10-11 11-12 12-13 Q1 2014
Service
Industry
Philippine Remittances & BPO Revenues (US $ bn)
Breakdown By Sector
13% 12% 11% 12%
31% 31% 31% 32%
56% 57% 58% 56%
2011 2012 2013 Q12014
Services
Industry
Agriculture
Growth Rate
Source: NSO
Source: NSO
Source: BSP/ BPAP
Strong Economic Fundamentals
• Continuing current account surplus expected, supported
by robust remittances from overseas Filipino workers,
substantial BPO revenues and increasing tourism receipts
• Improving governance and effective policymaking driving
political stability and increased economic competitiveness
with the Philippines improving its position in the World
Economic Forum Global Competitiveness Ranking by 26
spots from 2010 to 2013
• Solid fiscal and government finances as evidenced by the
credit rating upgrades by S&P (BBB-) and Moody’s (Baa3)
in 2013
19
Changing Demographic Window
Growing Middle Class Household
Income
High Population Growth + Young
Population Driving Housing Demand
0%
10%
20%
30%
40%
50%
60%
70%
80%
0.5% 1.0% 1.5% 2.0%
Japan
Germany
China
Indonesia
UK
US
Vietnam
Cambodia
Malaysia
Philippines
Median Age: 23 Years
Population Growth (2010 – 2030F)
% P
op
ula
tion
Un
der A
ge
Of
30
12th Most Populous Country
(100 mil) In The World GDP per capita (US $)
20
Source: NSO Source: NSO
Source: NSO
…And Untapped Market Potential
6.18m .4m
.54m
.61m 7.74m
End of 2012 2013 2014F 2015F Total
OtherLocations
Alabang
Eastwood
FortBonifacio
Ortigas
MakatiCBD
Forecast office new supply (in million of sqm)
53,314 4,394
6,346
7,530 5,913 78,212
End of2012
2013 2014F 2015F 2016F Total
Eastwood
Ortigas
FortBonifacio
Rockwell
MakatiCBD
Forecast of residential new supply (units)
Source: Colliers International Philippines Research
Source: Colliers International Philippines Research
620,548
633,209
646,128
659,306
672,763
686,484
2011E 2012E 2013E 2014E 2015E 2016E
Continuing Strong Housing Demand Expected
(units)
Source: Total Housing Needs / (Housing and Urban Development Coordinating Council)
15%
39%
73%
15% 6%
26%
82%
99% 90%
35%
Indonesia Malaysia Singapore Thailand Philippines
AC Ref
Source: Euromonitor (est. 21 million households)
Low Penetration Rate / % of Households
owning
21
Business Structure to Capture Growth
22
Air-conditioning Refrigeration
Redefinition of Core Business and Business Model
Shift from Product / Company centric to consumer centric
Building & Investing on Capabilities
Focus On Growing 2 Core Business
Largest Consumer Appliance
Company in the Philippines Preferred Building & Industrial
Solution Provider 23
Overall Distribution
Ownership 60% 100% 40% 51%
Products &
Services
Airconditioning
& Refrigeration
Residential
Refrigeration
Consumer
Appliances
Elevators
& Escalators
Holding
Company
Entity
24
Legal Entity Appliance Building & Industrial
Solutions
Residential &
Light Commercial
Aircon
Commercial
Aircon & Ref
Residential
Refrigeration
Laundry,
Kitchen,
Ref & Aircon
Elevators
& Escalators
Holding Company
Distribution Retailers &
Dealers
Direct &
Contractors
Overall Group Strategy
Strengthening Presence in
Core Markets
Expansion into New Markets and Customer
Segments
Synergize Businesses to
Strengthen Leadership,
and Increase Profitability
Entering Businesses for
Long Term Growth
Continue to invest and
expand in Airconditioning &
Refrigeration Markets to
maintain leadership position
and ensure sustainable
profitable growth
Expand Product lines
and offerings in
Consumer Appliances
Sector
Expand Building &
Industrial Solutions
platform to related other
products besides air-
conditioning
Leverage scale, synergize
different business units to
strengthen market
leadership, improve
efficiency and increase
profitability
25
Strategically Focused Organization with
Core Capabilities
Consumer Appliances End-to-End Building Solutions
Building best-in-class capabilities critical in supporting the core and being a key differentiator 26
Unlocked Synergies To Provide Cost Efficiency, Improving Quality & Strong Leadership
Sourcing And
Purchasing
Synergies
Cost Efficiency & Synergies
Shared
Back-end
Product Development &Technology
Quality Improvement
Shared Logistics & Distribution
Infrastructure
Market & Sales
Organizational Synergy Market Leadership
Go-to-Market Strategy
Unlocking Synergies to improve
leadership and profitability
27
Logistics
Leveraging Scale & Expertise to Create
Competitive Advantages
16.7%
25.8% 28.0%
30.0%
CIC Comp 1 (CICScale)
AC Company(only)
ChinaCompany
OPEX % of Sales
Distribution
Reach
After Sales Purchasing
Technology/Skill
Organization
Alliance / Partners 28
Directions
GROWTH PLATFORMS
Expansion CORE BUSINESS
Growth & Profitability
CORE BUSINESS
Growth & Expansion
60% 100%
51%
40%
Leading Airconditioning Company
in the Philippines
Leading Consumer Refrigeration
Company in the Philippines Expanding brand offering in
Consumer Appliances Sector
Expanded brand offering in
Building & Industrial Solutions
Sector
29
Medium Term Goals
5.6 6.9
7.6
2011 2012 2013LE . .. …
Sales
Acquisition and Expansions in New Businesses related
to the core
Expand & Grow Core Businesses
Synergies for Margin
Expansion
Key Directions
0.6 0.7 0.8
0.4 0.4 0.5
2011 2012 2013LE . .. …
Profit after Tax
Attributable Profit
30
Key Partners
Midea
32
United Technologies Building & Industrial
Systems Directions
33
PRODUCTS & BRANDS
2014 Key Programs
Strategy
Revenue : ~ 25% Growth
PAT : ~ 25% Growth
2014 Target
• Protect & Defend
• Leadership in all segments
• Expand Product Offering – Target
Product holes
• New Products
• Multiple Brands
• Strengthen and Expand Distribution
Channel and Reach
• Strengthen front & back end capabilities
CCAC Highlights
Strategy
• Expand Solutions Offering
• End to End Capabilities
• Build & Leverage Engineering &
Service Expertise
• Strategic business partnerships
• Brand building and Relationship
events
• Key Partnering activities
• New Products
35
CCAC Highlights
Multibrand Offering
NEW PRODUCTS
EVENTS
Key Account Development & Partnership
36
Strategy
Revenue : Php 500 mil
PAT : Break Even
Revenue : ~ 10% Growth
PAT : ~ 150% Growth
2014 Target • Acceleration of Cost reduction activities
• New Models with higher operating margin
• Synergize with CCAC and CIC to reduce backend cost
• Synergize with Midea for sourcing of FG and RM
CDI Key Directions
Increase
Profitability
Strategy
Product Bench Marking & Cost Reduction
Manufacturing Overhead Reduction
Purchasing Synergies And Alternative Sourcing
Logistics And Warehousing Synergies
Complement Current Product Line Up With High-end Products With Higher Margins
1
2
3
4
5
PROFIT AFTER TAX
37
CMIP Development
• Midea brand building
• Introduction of key products
• Set up key Organization
• Distribution with key retails
• Set up after sales infrastructure
• Synergize distribution for HVAC
Strategy
Key Organization in Place
Dealer Trip to
Midea
Revenue : Php 300 mil
PAT : ~10% loss
2014 Target
Introduction Schedule
38
Product Category Target Launch Date
Air Conditioning Feb 2014 OK
Washing Machine June’ 2014 OK
Refrigeration June’ 2014 OK
Small Kitchen Appliance Q4’ 2014 OK
Large Kitchen Appliance 2015
JV Partnership with Otis
• New Equipment Focus
• Tier 1 Developers Program
• Synergize with CCAC / BIS team
• New Product Gen 2 Elevator
• Rebuild Otis Brand
• Focus on Core Processes
• Develop key Talent
• Recapture Program (3,200 units)
• Service Excellence
• 90% Conversion Rate
• Below 5% Cancellation Rate
Strategy
Revenue : ~ Php 350 mil
PAT : ~ 10% (attributable)
2014 Target (9 months)
39
Revenue & Margin
2011 2012 2013
129
143148
54%49% 43%Margin
Repair Sales & Margins
40
+40%
216 302 323 331
61.4%55.8% 55.6% 55.6%
2010 2011 2012 2013
Service & Maintenance
-61% +40% +5.7%
Revenue
Revenue
Total Revenue New Equipment Market
15%
CAGR
31% of Revenue 37% of Revenue 32% Revenue
9% Margin 56% Margin 45% Margin
7% 2%
61%
Strategic Directions
Sustainable Profitable Growth in Core Business - Gain Market Share through Continuous Product Introduction
- Strengthen Capabilities
- Relentless Drive for Productivity
Acquisitions - Execute the Midea Promise of Expanding to Consumer Appliances
- Growth in Building and Industrial Solutions through Related Acquisitions
Maximize Synergies - “Go-to-Market” Efficiencies
- Shared Back-end Resources
CONFIDENTIAL 41
Status of Key Strategic Priorities
Grow & Expand Core Business
• Revenue up 24% • Consumer Segment up 19%
• Building & Industrial Segment up 19%, (31% including off shore)
• Backlog up 250%
• Earnings up 36% (PAT), 36% (PATAMI) • Aircon up 27% (.6 pt. improvement)
• Ref up 201% (2.1% to 5.5% PAT%)
New Business Partnerships
• Midea Joint Venture (Nov 2013)
• Washing Machine / AC / VRF / Ref / Small Kitchen
Appliances launched
• Otis Elevators & Escalator (End March 2014)
o Unlocking Synergies • 2nd half 2014 and 2015 focus
42
3Q 2014 Performance
3Q Highlights
+ • Positive economy driven by strong
fundamentals
• Growing consumption
• Steady but increasing inflation
• Strong liquidity
• Overall consumer and business
optimism
- • Logistic & Port Issues
• Weather
• Peso Depreciation
44
213
286
377
14.9% 15.7% 18.0%
2012 2013 2014
1,433 1,816
2,092
34.2% 35.5% 36.0%
2012 2013 2014
Profit After Tax / Net Margin (Php Mil) KEY HIGHLIGHTS
▲ 20% growth in earnings
▲ 15% growth in reportable sales
▲ .3 pts higher net margin
+15% ▲
152
198
248
-
100 124
149
10.6% 10.9% 11.9%
7.0% 6.8% 7.1%
2012 2013 2014 2012 2013 2014
Net Sales & Gross Margin% (Php Mil)
Key Financial Highlights 3Q 2014
+27% ▲
Profit before Tax & PBT% (Php Mil)
+34% ▲
+32% ▲
PATAMI PAT
+30% ▲
+25% ▲
+20% ▲
45
+24% ▲
3Q Revenue Performance PhP Mil
46
15% Growth
2013 2014
P1,816 2,092
10% Growth
2013 2014
P 1,275 P 1,397
8% Growth
2013 2014
P541 P587
2% Growth
2013 2014
P 924 P 943
29% Growth
2013 2014
P 351 P 455
32% Overall
Growth
P 373 P 494
2014
P 109
16% growth including offshore
11% growth including offshore
Flat Residential
Sales driven by Q2
pull-in and weather
disturbances
Driven new
models
Strong commercial
business with
rising backlog
32% growth
(including offshore
sales)
3Q Earnings Performance PhP Mil
47
20% Growth
2013 2014
P124 P 149
6.8% 7.1%
23% Growth
2013 2014
P 186 P229
14.6% 16.4%
107% Growth
2013 2014
P 20.4 P 42.2
3.8% 7.2%
Start Up
2013 2014
- P 38.7
2014
P 15.8
14.6%
23% Growth
2013 2014
P 112 P 138
107% Growth
2013 2014
P 20.4 P 42.2
Start Up
2013 2014
- P 15.5
2014
P 8.1
Profit After Tax PATAMI
PATAMI
Sales drop thru
Cost Reductions
Cost reductions
Higher Margin
Products
Start up Cost
Investing for the
future
Net Revenue (Php Mil)
+6% +6%
CCAC Highlights
48
+
14%
932
1,275 1,397
43.3% 42.8% 39.4%
2012 2013 2014
Sales GM%
Overall
924 943
351 454
2013 2014 2013 2014
CSG BIS
Profit After Tax / Net Margin (Php Mil)
132
186
229
79 112
138
14.1% 14.6% 16.4%
8.5% 8.8% 9.8%
2012 2013 2014 2012 2013 2014
+23% +23%
PAT PATAMI
+ 42% +42%
• 10% Overall Sales Growth
• 23% Growth in Earnings
• 1 pts. Net Margin improvement
• Strong commercial business driven by backlog
• Flat Residential Sales driven by Q2 pull-in and
weather disturbances
Key Highlights
+ 10% +37% +2% +29%
+32% growth including Offshore
sales
Profit After Tax / Net Margin (Php Mil)
501 541 587
17.2% 18.4%
26.4%
2012 2013 2014
+8%
19.5 20.4
42.2
3.9% 3.8% 7.2%
2012 2013 2014
Net Revenue (Php Mil)
+8%
+5% +107%
CDI Highlight
• 8% Sales Growth
• 107% growth in earnings
• due to improved focus on cost reductions
• introduction of higher margin product
• 3.4 pts. net margin improvements
Key Highlights
49
CMIP Highlights
Product Category Target Launch Date
Air Conditioning Feb 2014 OK
Washing Machine June’ 2014 OK
Refrigeration June’ 2014 OK
Small Kitchen Appliance Q4’ 2014 OK
Large Kitchen Appliance Q4’2014 move to 2015
50
+
1
4
%
29
2014
Sales Profit After Tax / Net Margin
(Php Mil)
(39)
(15)
2014 2014
+48%
PAT PATAMI
Total of 93 stores activated SDA Launch in end Q3
36
57
Q2 Q3
Store Activation
Otis Highlights
2014
108.6
Sales
March 28, 2014 51
NEXT 90 DAYS FOCUS
Reinforcing the organization
Reorganize & improve service operations
Equipment sourcing options & negotiations
Post JV statutory completion
IT transition services
Commence ERP system implementation
Profit After Tax / Net Margin (Php Mil)
15.8
8.1
PAT PATAMI
14.6%
7.4%
Operating Performance Summary
52
2014 2013 Growth 2012
Net Sales 2,091,903 1,816,150 15% 1,432,906
Gross Profit 732,247 644,742 14% 489,438
Gross Margin 35.0% 35.5% -0.5pts 34.2%
Opex 340,714 360,694 6% 288,069
Opex % 16.3% 19.9% +3.6pts 20.1%
Profit before Tax 376,794 286,022 32% 212,867
PBT% 18.0% 15.7% + 2.3 pts 14.9%
Profit after Tax 248,462 198,455 25% 152,231
PAT% 11.9% 10.9% +1 pts 10.6%
Attributable Profit 149,028 123,929 20% 99,607
PATAMI% 7.1% 6.8% + .3pts 7.0%
Earning per Share Php0.44 Php0.36 20% Php0.29
* Based on 339,617,226 shares
YTD 2014 Performance
Highlights
+ • Positive economy driven by strong
fundamentals
• Growing consumption
• Steady but increasing inflation
• Strong liquidity
• Overall consumer and business
optimism
- • Logistic & Port Issues
• Weather
• Peso Depreciation
54
Key Drivers
Continued GDP Growth
1,055
970
1,015
1,025
1,093
1,209
1,405
1,684
1,919
1,851
2,155
2,380
2,613
2,795
2,919
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014H1
Increasing Per Capita Income ($ per capita)
5.2%
4.1%
5.1% 5.5%
6.0%
4.4% 4.2% 4.6%
3.7%
2.3%
3.4%
5.6%
6.6%
5.7% 5.6%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
20141H
Consumer Spending Growth
4.2
9.6
8.6
4.2
5.6
11.0
11.2
2.5
6.3
4.5
8.4
6.2
Food & Beverage
Alcoholic Beverage & Tabacco
Clothing & Footware
Housing, water, electricity, gas
Furnishings, household…
Health
Transport
Communication
Recreation
Education
Restaurants & Hotels
Misc
More disposable income
Auto Industry Gallops
into 2014 with 27%
Year-on-Year Growth
Key Drivers
56
First Time
Buyers
15% Growth
Replacement
Market
>50% Growth
Increasing
Projects Backlog
& Funnel
Key Market Drivers for 2014
Refrigeration
Cost reduction
gaining traction
57
New
Acquisitions
Q3 Funnel P 6.2 Billion and
backlog of P 1.5 billion
Key Market Growth
58
9.9 10.111.4
10.611.7
12.6
14.1
2008 2009 2010 2011 2012 2013 2014
9.8 9.011.3 11.2
13.516.8
21.1
2008 2009 2010 2011 2012 2013 2014
Air-conditioning Market 2014 Estimate
(PHP billions)
Refrigeration Market 2014 Estimate
Tracking 25% growth Tracking 12% growth
Euromonitor CCAC Estimate
748 886
1,222
15.5% 15.9% 17.6%
2012 2013 2014
4,838 5,585
6,935
32.7% 35.2% 34.2%
2012 2013 2014
Profit After Tax / Net Margin (Php Mil) KEY HIGHLIGHTS
▲ 36% growth in earnings
▲ 24% growth in reportable sales
▲ .6 pts higher net margin
+24% ▲
530 608
824
-
338 363 495
10.9% 10.9% 11.9%
7.0% 6.5% 7.1%
2012 2013 2014 2012 2013 2014
Net Sales & Gross Margin% (Php Mil)
Key Financial Highlights YTD 2014
+15% ▲
Profit before Tax & PBT% (Php Mil)
+18% ▲
+38% ▲
PATAMI PAT
+14% ▲
+36% ▲
+36% ▲
59
+7% ▲
YTD Revenue Performance PhP Mil
60
24% Growth
2013 2014
P 5,585 P 6,935
22% Growth
2013 2014
P 3,986 P 4,858
16% Growth
2013 2014
P1,599 P1,848
21% Growth
2013 2014
P 3,108 P 3,774
24% Growth
2013 2014
P 877 P 1,084
35% Overall
Growth
P924 P 1,247
2014
P 229
26% growth including offshore
25% growth including offshore
YTD Earnings Performance PhP Mil
61
36% Growth
2013 2014
P363 P 495
6.5% 7.1%
27% Growth
2013 2014
P 612 P777
15.4% 16.0%
201% Growth
2013 2014
P 33.6 P 101.2
2.1% 5.5%
Start Up
2013 2014
- P 81.3
2014
P 37.7
16.4%
27% Growth
2013 2014
P 367 P 466
201% Growth
2013 2014
P 33.6 P 101.2
Start Up
2013 2014
- P 32.5
2014
P 19.2
Profit After Tax PATAMI
Operating Performance Summary - YTD
62
2014 2013 Growth 2012
Net Sales 6,935,024 5,585,268 24% 4,838,255
Gross Profit 2,368,561 1,967,455 20% 1,581,812
Gross Margin 34.2% 35.2% - 1.0 pts 32.7%
Opex 1,175,758 1,090,637 -8% 867,283
Opex % 17.0% 19.5% +.1.5pts 17.9%
Profit before Tax 1,222,160 885,655 38% 747,955
PBT% 17.6% 15.9% + 1.7 pts 15.5%
Profit after Tax 824,154 607,785 36% 529,704
PAT% 11.9% 10.9% +1 pts 10.9%
Attributable Profit 495,040 362,832 36% 338,163
PATAMI% 7.1% 6.5% + .6pts 7.0%
Earning per Share Php1.46 Php1.07 Php.99
* Based on 339,617,226 shares
YTD 2014 Key Performance Indicators
63
September 30, 2014 September 30, 2013
Gross Profit Margin (%) 34.2% 35.2%
Profit before Tax % 17.6% 15.9%
Net Income Attributable to
Shareholders (Php million) 495.0 362.8
Net Income Attributable to
Shareholders (% to Sales) 7.1% 6.5%
Return on Average Equity (%) 29.4% 28.4%
Return on Average Assets (%) 19.0% 18.0%
Earnings per Share (339,617,226 shares)
1.46 1.07
September 30, 2014 Dec 31, 2013
Debt to Equity Ratio 0.94 0.71
Asset to Equity Ratio 1.94 1.71
Current Ratio 1.69 2.30
Book Value per Share (339,617,226 shares)
7.74 5.49
For the Period Ending
As of End
Dividend Policy : 30% of prior year’s Net Income of CIC
1. Cash Dividend declared of Php .59 / share for all shareholders on record as of
April 2, 2014. and payment date on April 30, 2014 (equivalent to 30% of 2013
Net Earnings)
2. Special Stock Dividend of 30% for all shareholders on records as of AUG. 22,
2014 and payment date of SEPT. 8, 2014
64
Dividend Declarations
Share Price Performance
65
CIC vs. Philippine Composite Index
Key Market Statistics
Last Closing Price (11/07/2014) Php 39.00
Share Price High (Adjusted) Php 43.69
Share Price Low (Adjusted) Php 16.54
Share price at listing (Adjusted) Php 20.38
Share Performance Since Listing 92%
Current Market Cap (Php) Php 13.2
billion
Current Market Cap (US$) USD 294
million
27-Nov-13 27-Jan-14 27-Mar-14 27-May-14 27-Jul-14 27-Sep-14
CIC Price CIC Volume PSEi
2014
Guidance
2014 Guidance
Segment Sales Growth Profit Change
Air Conditioning ~ 20 to 25% growth ~ 20 to 25% growth
Refrigeration > 10% growth ~ 150 % growth
Organic Businesses ~ 20% growth ~ 25% growth
Midea (Combined) ~ P 300 million ~ 10% loss
Otis ~ P 350 million ~ 10% margin
New Businesses ~ 5% growth ~ % growth
Overall Consolidated
(After Minority Interest)
~ 25%
growth
~ 25%
growth
67
FY Guidance
68
ONE Company. ONE Team. ONE Goal
Net Revenue (Php Mil)
+6% +6%
CCAC YTD Highlights
69
+
14%
3,276 3,986
4,858
39.7% 41.9% 37.7%
2012 2013 2014
Sales GM%
Overall
3,108 3,774
877 1,084
2013 2014 2013 2014
CSG BIS
Profit After Tax / Net Margin (Php Mil)
479
612
777
287 367
466
14.6% 15.4% 16.0%
8.8% 9.2% 9.6%
2012 2013 2014 2012 2013 2014
+27% +27%
PAT PATAMI
+ 28% +28%
• 22% Overall Sales Growth
• 27% Growth in Earnings
• .4 pts. Net Margin improvement
• Strong commercial business driven by backlog
Key Highlights
+ 22% +22% +21% +24%
+35% growth including Offshore
sales
Profit After Tax / Net Margin (Php Mil)
1,562 1,599 1,848
17.9% 18.6% 23.9%
2012 2013 2014
+16%
45.5 33.6
101.2
2.9% 2.1% 5.5%
2012 2013 2014
Net Revenue (Php Mil)
+2%
-26% +201%
CDI Highlight
• 16% Sales Growth
• 201% growth in earnings
• due to improved focus on cost reductions
• introduction of higher margin product
• 3.4 pts. net margin improvements
Key Highlights
70
CMIP Highlights
71
+
1
4
%
2014
126
Sales Profit After Tax / Net Margin (Php Mil)
(81.3)
(32.5)
2014 2014
+48%
PAT PATAMI
Total of 93 stores activated as of Sept
Media and Bloggers launch in Q2
Product Category Target Launch Date
Air Conditioning Feb 2014 OK
Washing Machine June’ 2014 OK
Refrigeration June’ 2014 OK
Small Kitchen Appliance Q4’ 2014 OK
Large Kitchen Appliance Q4’2014 move to 2015
JV Partnership with Otis
229
2014
Sales
March 28, 2014 72
NEXT 90 DAYS FOCUS
Reinforcing the organization
Reorganize & improve service operations
Tier 1 Developer Recovery Plan
Profit After Tax / Net Margin (Php Mil)
37.7
19.2
PAT PATAMI
16.4%
8.4%
Thank you For further inquiries contact:
Grace Velasco
Investor Relations and Corporate Planning