2016 in Review
2016 was a year of great strides for the Food Group.
We delivered business growth across all Flour, Feeds and Farms businesses and remained true to our vision of being our customers’ Partners for Growth.
The year, however, did not come without challenges.
The ASEAN Integration has leveled the playing field in the region. It has provided Pilmico a new frontier to expand its customer base outside the Philippine market, albeit there is increased competition with the entry of new domestic and international flour and feed millers.
Pilmico has always remained vigilant in identifying opportunities to grow its businesses while protecting its market share.
Our Representative Offices in Vietnam and Indonesia have opened the doorway to the ASEAN flour market. To date, we have expanded the reach of our flour exports in countries like Vietnam, Thailand, Indonesia, Malaysia, Myanmar and Hong Kong that have resulted in volume growth.
In 2016, Pilmico Vietnam Trading Company Ltd. was established in Ho Chi Minh City to grow and strengthen Pilmico’s flour and animal feeds businesses in the ASEAN region.
Feeds Philippines enjoyed healthy volume growth rates in 2016. Our sustained growth has allowed us to strengthen our market position in the animal feeds industry in the Philippines.
2016 represented a year of growth for the Feeds business despite challenging market conditions. We completed feedmill expansions across all sites, adding 20TPH in Iligan, Tarlac and Vietnam. These expansions account for the 50% increase in our milling capacity, enabling us to expand our customer base and product portfolio.
Today, Pilmico VHF serves aquafeeds for both tilapia and bangus in Cambodia and the Philippines
As a total solutions provider, we aim to become a one-stop shop that offers quality feeds, technical support, genetic advice, and a growing range of Animal Healthcare products.
The Farms business continued its expansion and reached the 13,243-sow level. This expansion boosted the capacity of market hogs and increased the volume of live hogs and meat sales.
In December 2016, Pilmico completed its first Poultry Layer Farm housing 172,000 birds. Its produce, meats and egg products are being sold to wholesalers and institutional buyers like hotels and restaurants.
Investing in talent is crucial to sustaining the growth of our business. Believing in people who will take responsibility for their development drove Pilmico to launch Project ME. There is so much interest among our team members that 65% of Pilmico’s population are now enrolled in the program. With team leaders trained to be coaches, Pilmicans turn to them as their growth partners, reinforcing the achievement of goals and driving self-development.
In 2016, we introduced marked improvements in our day-to-day operations, brought on by the adoption of several cloud-based applications and systems.
Logistics. To improve the delivery of our products to customers, we implemented the Oracle Transportation Management System. This system automates transportation planning and provides visibility of our delivery performance and cost.
Procurement. An e-bidding platform called Ivalua was implemented to automate the sourcing and bidding process. It has improved the transparency of bids and has exceeded the amount of committed savings on procurement.
Finance. Anaplan is a financial planning platform that has enabled us to automate our budgeting and forecasting processes. This was completed in-house and with minimal external IT support.
ASEAN systems. We implemented the Oracle Cloud ERP in Pilmico VHF, a cross-functional effort across Pilmico partners in Vietnam and the Philippines. It includes modules on finance, inventory, and purchasing. This is the first-ever cloud ERP deployment in the Aboitiz Group.
Our vision to be Partners for Growth continues to be at the forefront of our stakeholder engagement strategy.
From its early beginnings as a rehabilitation project in 2013, Mahalin Pagkaing Atin, our most important advocacy, has been elevated to a more inclusive and sustainable livelihood program. It benefits not only backyard farmers but also a sector of society that urgently needs an alternative source of income – repatriated Overseas Filipino Workers (OFWs). We have also diversified our livelihood package to include bakery starter kits to give opportunities to people who want to start a neighborhood bakeshop.
Under the banner of the Mahalin Pagkaing Atin campaign that started in 2013, we have already visited 32 provinces and 23 cities, and have helped over 750 families all over the Philippines. And our beneficiaries are continuously growing.
To further support backyard raisers in the country, we conducted an Animal Health caravan in collaboration with the Department of Agriculture, providing free veterinary medicines, basic farm equipment, and skills training to select beneficiaries.
2016 was also the year we made crucial steps towards creating shared value with the communities we serve.
From an employee-driven initiative, the Life Sacks project has changed the lives of an all-women’s sewers cooperative in Taguig. It has created a more sustainable livelihood program, turning used Pilmico sacks into recyclable bags and replacing commercially produced eco bags.
The Care Package, an effective and efficient first response to hunger for people affected by disasters and emergencies, is a proud innovation of Pilmico. The package contains food that are ready to eat, easy to transport ,and packed with essential nutrients and energy for survival.
The growth in Southeast Asian economies has demonstrated resilience over the last three years despite a challenging external environment. Strong domestic consumption and investment supported the growth in ASEAN.
The Philippine economic forecast for 2017 remains positive. Driven by private and government spending, GDP is projected to increase by 6.2% while inflation is at 2.6%. We believe that the continued economic growth will result to an expanded purchasing power for the Filipino people.
The renewed focus on agriculture by the current administration gives us the confidence that Pilmico’s business model will open new opportunities for inclusive growth. Well-situated at the beginning of the food chain, it puts Pilmico in a stronger position.
The Aboitiz unified long-term strategies of business growth, stakeholder engagement, execution excellence and building human capital will continue to be our pillars as we work toward building a purpose-driven organization. We will continue to grow domestically and internationally, increasing our stakeholders’ value.
We continue our aggressive pipeline of projects to grow and diversify our businesses in the countries we operate in:
We will continue to invest in both our people and technology. Pilmico as an organization is multi-generation, and it is crucial that we create an environment that we can all work collaboratively as one. We will adapt to the digital world, build on our capabilities, services and offerings, as well as improve our efficiencies, and level up customer experience.
Most importantly, we know that to keep advancing our businesses, our strategies must remain grounded on becoming Partners for Growth.
In 2017, we aim to achieve business success while promoting the needs of our customers and the communities we serve. We will expand our reach nationwide and build on the considerable work we have done for our backyard farmers.
The rapid changes happening in the industries we are in pose new challenges and opportunities for the Food Group.
This year, teamwork and digitization will be our approach to triumph over the growing complexities of our businesses. The core of our strategy is to have the best team possible.
We believe that by embracing change, identifying fresh approaches, and tapping the potential of our people, we can continue the strong growth momentum in 2017.
Culture and engagement will continue to be our top priority across regions. We will strengthen our people strategies anchored on the Aboitiz core values of integrity, teamwork, innovation and responsibility.
Let it be Pilmico’s mantra that behind a successful organization is a great team.
Sabin M. Aboitiz
President and CEO
Pilmico did well in 2016 despite all the challenges. And I know that there will be more challenges to face as our business grows. As long as we work together in executing our plans for the coming year, Pilmico will come out better than we did in 2016.
–Michael L. Tan, COO Food Group, Pilmico
2016 represented a year of resilience for the Feeds group as we dealt with many challenges on our way to delivering our volume commitments. It was a year that saw expansion in our production capacity as well as a shift in our product mix, as we sought to capitalize on a changing dynamic in the backyard sector.
We anticipate 2017 will bring its own set of challenges, which we will tackle with a focus on the value of teamwork and our objective of being a total solutions provider to our customers.
–Tristan R. Aboitiz, VP and COO for Feeds Sales and Head of Risk & Commodity, Pilmico
Although prices were weak for much of 2016, the Farms division delivered steady results, thanks to its usual effective cost management, strong selling efforts, and increased capacity. Our newer lines of business, both the layer farm and meats, continue to grow and the supporting organization around them is steadily being built up. We aim to carry this momentum forward into 2017 and continue the growth across all parts of the business.
–William W. Paradies, VP and COO for Farms, Pilmico