URC sets aside P7.1B for expansion

Universal Robina Corp. (URC), the food manufacturing arm of the Gokongweis’ JG Summit Holdings Inc., is allotting P7.1 billion this year for the continued expansion of its beverage and biscuit lines, flour milling capacity, piggery and feed operations.

The programmed capital budget is higher than last year’s P5.5 billion.

In a filing with the Securities and Exchange Commission, URC said around P5.6 billion of the proposed budget will be used to expand its branded consumer food operations, largely the beverage line, and its presence in international markets such as Thailand, Vietnam and China.

About P934.8 million will be spent for the expansion of the raw milling capacity and a new refinery.

The remaining P580.2 million will be used to beef up manufacturing facilities for URC’s agro- industrial division.

Funding will come from internally-generated cash. As of end-September 2006, URC’s net cash flow amounted to P3.8 billion.

URC said it has "again set an aggressive target on the ensuing year to maintain its dominance in the Philippine market as well as in the ASEAN regional market."

The company reported a net income of P3.02 billion in its fiscal year ending September last year, up 19.4 percent from the previous level’s P2.53 billion on the back of a 12.8 percent increase in sales due to the strong performance of beverage products like coffee and tea.

Sales of other core products such as snacks, candies and chocolates have also boosted sales.

URC said sales in its agro-industrial division grew 20.6 percent to P5.1 billion, largely driven by its animal feeds business, which reported a 40.9 percent jump in net sales to P2.2 billion.

The commodity foods segment, on the other hand, registered sales of P3.5 billion or 9.5 percent higher than the previous level, mainly due to increased sales from its sugar business by 24.9 percent.

Cost of sales and services went up 13.1 percent to P26.4 billion from P23.3 billion, largely due to higher cost of major raw and packaging materials.

Gross profit, meanwhile, amounted to P8.83 billion, up 11.8 percent from the previous level’s P7.9 billion.

URC said finance costs consisting mainly of interest expense rose 7.4 percent to P2.3 billion from P2.1 billion largely due to the additional interest payable on the $200 million guaranteed notes issued in Jan. 2005 and bank loans obtained last year.

URC successfully sold last year a total of 634.78 million common shares in a primary and secondary offering at P18 each, raising around P11.43 billion.

URC manufactures branded consumer snack foods like Jack & Jill snacks, Great Taste coffee mixes, Cloud 9 and Nips chocolates, Magic Flakes biscuits, XO and Maxx candies, Payless and Nissin noodles, and Hunts canned products and sauces, among others.

Aside from China, Vietnam and Thailand, URC has production facilities in Malaysia and Indonesia and sales/marketing offices in Hong Kong and Singapore.