Consumer appliances and enterprise solutions firm Concepcion Industrial Corp. (CIC) reported a 45-percent drop in attributable net income to ₱99.2 million in the first quarter of 2026, with the effects of the escalating Middle East conflict already creeping into its March results.

In its quarterly report, the firm said reported net income was 41 percent lower compared to the same period last year at ₱171 million, mainly due to significant foreign exchange (forex) losses, higher freight costs, and lower sales incurred in March, when the war in the Middle East intensified. The peso moved closer to the ₱61:$1 level last month, before plunging to its historic low of ₱61.567 last April 29.

It added that equity earnings from associate Concepcion Midea Inc. (CMI) were also negatively impacted by forex.

In the fourth quarter of 2025, CIC’s consolidated earnings fell 30 percent to ₱196 million from the ₱278.7 million reported a year ago.

CIC posted consolidated net sales of ₱4.8 billion in the first quarter of 2026, down two percent from the same period last year. Including associate CMI, net sales grew nine percent to ₱7.1 billion.

The firm noted that retail demand remained soft amid weaker consumer sentiment and cautious spending, while the commercial business, aftermarket, and selected appliance categories continued to grow.

Gross profit was broadly flat at ₱1.5 billion, while operating expenses (opex) rose by one percent to ₱1.2 billion, mainly due to higher outbound freight costs.

However, it said profitability was significantly affected by forex losses arising from the depreciation of the Philippine peso against the United States (US) dollar and Chinese yuan.

The consumer segment posted ₱3.3 billion in net sales, down four percent year-on-year due to softer demand for residential air conditioners and a shift toward more affordable options.

This was partly cushioned by solid growth in the refrigeration and other appliance categories.

In contrast, the commercial segment posted net sales of ₱1.4 billion, representing a five-percent year-on-year growth primarily driven by robust sales of air conditioning for commercial projects and aftermarket services.

This was partly offset by lower elevator equipment sales due to the timing of equipment arrivals.

CIC registered first-quarter gross profit of ₱1.5 billion, flat versus last year despite lower sales volume, primarily supported by a favorable mix.

Total opex for the quarter stood at ₱1.2 billion, a one-percent increase versus the same period last year, mainly due to higher freight costs amid rising fuel prices, partly mitigated by tight management of opex.

Other operating loss amounted to ₱51.5 million, primarily due to forex losses arising from peso depreciation, partly offset by interest income on deposits and other income.

Forex losses totaled ₱89.4 million, compared with a gain of ₱17 million in the same period last year. Finance costs amounted to ₱10.7 million, mainly representing interest on lease liabilities and short-term borrowings. - James A. Loyola