Coming from the heels of the earthquake in Bohol and Yolanda, the Visayas outlook in 2014 was bleak. However, Pilmico has remained consistent in delivering our revenue streams.
Flour volume growth was stable at 2% despite the influx of cheaper imported flour. Imported flour has grown 18% year-on-year in terms of volume and now accounts for 11% in market share.
Feeds volume has grown at an annual rate of 11% over the last five years, effectively growing our market share in the feeds industry to 9% from just 6% in 2009. This has been achieved through our strong sales workforce, increased marketing efforts, and the strengthened growth in our gamefowl feeds, Salto. 2014 also saw Cagayan de Oro host the third run of the Pilmico Livelihood Expo, an event that continues to provide a venue for future partnerships with the backyard industry.
Our Farm volume growth has increased at about 10% per year over the last five years.
Despite the double-digit growth, this has not significantly strengthened our position in the market with major competitors growing just as fast. Despite the growth in commercial farms, the backyard farm segment has seen a consistent decline in recent years.
We also launched our Mahalin Pagkaing Atin advocacy program in support of backyard farmers, which are a significant market for our feeds products. While the program was initially launched in the disaster-stricken areas of Ormoc, Cebu, Bohol, and Tacloban, our thrust is to go beyond providing rehabilitation and livelihood programs for backyard farmers. For 2015, we plan to expand Mahalin Pagkaing Atin to address social issues of the farmers and help our partners grow their businesses.
2014 proved to be very significant as well, marking our entry into the ASEAN market with the purchase of our first feed mill operations in Vietnam, the first international investment of the Aboitiz Group. We also established our Representative Office in Indonesia.
In August 2014, Pilmico International successfully acquired a 70% equity stake in feed mill operator Vinh Hoan 1 Feed JSC (VHF) from its parent company Vinh-Hoan Corporation (VHC). VHF is the fourth largest aqua feed producer in Vietnam and presents opportunities for both Pilmico International and VHC to leverage on their competencies and grow the business together.
Although introduction of our flour products into Vietnam and Indonesia has proven to be challenging, these countries and its surrounding region are definitely areas where we will set our sights and efforts in 2015 and in the coming years. Setting up offices and/or businesses in these countries will help us prepare on how we can capitalize on business operations across the region, open doors for potential cross- border partnerships, learn new markets and new products, and, consequently, strengthen our firm’s competencies in current industries and markets we operate.
Our ability to expand our business has been possible with our strong belief in our values of integrity, teamwork, innovation, and responsibility. It takes years to inculcate and empower people to be responsible for their own growth and development both on the professional and personal levels. 2014 was the year where we started seeing the fruits of our labor over the last couple of years in terms of training and development. We are pleased with how people have stepped up, taken on more responsibilities, and continued to deliver the level of quality performance we expect from each team member and partner.
2015 OUTLOOK
ASEAN economies have demonstrated resilient growth over the last two years, supported by strong domestic consumption and investment.
Our country’s economic forecast for 2015 is very positive with GDP projected to grow at 6.5%, driven by private and government spending. Inflation is seen to slow down to 3% next year, whereas interest rates are projected to rise slightly given the recovery of the US. These economic indicators suggest, among others, that our home market, together with the ASEAN community, will continue to grow.
WHAT DO THESE MEAN TO US?
With trade liberalization, we expect competition to get tougher, both on the domestic and regional fronts.
Our four-pronged long-term strategies will continue to be our compass as we work toward building a purpose-driven, fully integrated food company in the region.
We have several projects in the pipeline to continue to grow and diversify our business in the country:
FEEDS :
- Increase in feeds production capacities in Iligan and Tarlac
- New loading pier for feeds finished goods
- Additional feeds products
FARMS:
- Increase sow level to 14,000 heads
- Build additional farm facilities
- Accelerate capability building for meats business
- Operate own layer farm with monthly output of 4 million eggs by July
FLOUR:
- Export flour around ASEAN region
- Build Pilmico Research & Training Bakery in Cebu
- Build and operate a commissary
ASEAN:
- Expansion of aqua feed mill in Vietnam
- Participate in fish farm business in Vietnam through acquisition and/or greenfield
- Pursue other opportunities in the region through mergers and acquisitions
- Set up Pilmico International office in Vietnam
Our quest for growth and expansion will provide our team members endless opportunities for personal and professional growth and development. At the same time, we create opportunities for employment and help local economies, especially in areas and communities where we operate.
To manage the expected growth and expansion, we continue to equip our team with tools, systems, and processes to make our jobs easier and achieve work-life balance.
For the first quarter, we are rolling out two major systems initiatives – the Oracle Transport Management System and Maximo, our Enterprise Asset Management System. Both systems are expected to help us deliver on our commitments to our customers and team members, thus creating better Partners for Growth.
Project ME will be our flagship program for our people strategy of building better leaders through our values. Its success and the success of our team members will depend on how seriously he/she will take on the responsibility of self-motivation and self-development.
2015 will be the beginning of our move towards building a more purpose-driven organization. Our Mahalin Pagkaing Atin advocacy will take center stage in 2015. This is our heart and soul, our reason for being. We believe that by doing good, we can do well and build a sustainable enterprise.
In the next couple of years, we want to focus on leveraging on our core values of integrity, teamwork, innovation, and responsibility. Building a purpose-driven organization will be the ultimate manifestation and a true test of our core values.