Concepcion Building and Industrial Solutions (BIS), the commercial arm of air-conditioning and refrigeration systems leader Concepcion Industrial Corporation (CIC), posted a total of Php2 billion in sales as of end-2014, representing a 50% growth as compared to 2013 figures. Moreover, first half unaudited sales of Concepcion BIS were approximately P1.1 billion, with a growth of 49% against the same period last year.
As a percentage of CIC’s total sales, Concepcion BIS increased contribution from 15% as of mid-2014 to 22% by end-2014. Concepcion BIS’ leadership is confident that the business unit will continue to increase its contribution to CIC’s total sales by executing its growth strategies.
“The significant growth was driven by the Otis joint venture in March 2014 and strong orders from air-conditioning projects,” says Concepcion BIS Group Director Rajan Komarasu. “Revenue from Otis in 2014 stood at Php381 million, accounting nine months of sales since the joint venture late March 2014. We are bullish of Otis’ growth, but it will take time to realize the benefits of the investments that we are making in the company.”
Concepcion BIS also plans to increase its share in the heating, ventilation, and air-conditioning (HVAC) industry by capitalizing on the wide product offerings under Carrier, Toshiba and Midea brands under its business unit. CIC entered into a joint venture with Midea in late 2013 to expand its portfolio into the consumer appliance business.
Komarasu explains, “Once the Midea brand, which we launched last year, gains more traction, we are confident that our market share will improve especially in the provincial areas where we are focusing on improving distribution through our contractor partners. As of June this year, we have over 80 strong partners working with us in offering HVAC solutions.”
Concepcion BIS remains optimistic that it will continue on the growth trajectory, buoyed by economic expansion and growth in the construction industry.
In the past year, Concepcion BIS has been a key partner of the leading developers in the Philippines. Concepcion BIS is also beginning to tap other developers not just for their HVAC needs, but also for their elevator requirements. The business unit’s other key wins in 2014 range from high-rise residential condominiums to hotels and casinos, malls, and airports. Concepcion BIS also has a considerable footprint in the manufacturing industry.
“We even provide specialized ducting solutions for a large LNG project in the Philippines,” Komarasu adds.
“We are seeing a lot of vertical development, which works well for our elevator and air-conditioning solutions, such as high-rise residential condominiums, which are coming up due to high demand from returning OFWs and foreigners,” Komarasu explains. “We are also seeing office buildings being built to support the ever-growing BPO industry, and more hotels and casinos are aimed at taking advantage of the growing number of tourist arrivals in the country.”
Available information supports Concepcion BIS’ confidence that there are future market opportunities in store for the business unit in the construction industry. Based on building permits statistics, approximately 15 million square meters of floor space of high-rise condominiums, commercial buildings, and malls were added in 2014 for construction, which represents a 36% growth as compared to 2013.
“For our elevator business, the increasing number of high-rise buildings will definitely have a positive impact, not to mention the potential maintenance revenue we can get from the higher new equipment sales,” Komarasu adds.
Komarasu also expects to see more opportunities for growth outside of Metro Manila, where most of the new building permits are located, based on statistics. One other potential growth area is the apparent shift by the market toward environment-responsible refrigerants like those that Concepcion BIS uses in its products.
The business unit is also confident that it could realize the growth that it expects.
“We believe that, to date, we are the only company that offers end-to-end solutions, from the concept and design stage, all the way to project management, commissioning, maintenance, and retrofit,” says Komarasu. “Our offerings, from HVAC to elevators and escalators, simplify things for the customer from an equipment standpoint and aftermarket support.”
“Moreover, to cater to the construction growth, we have increased our manpower requirements in 2014 and will continue to hire this year. As of June 2015, Concepcion BIS’ headcount stood at 368, an increase of 60 personnel from the same period last year.”