URC earnings decline 24% to P4.9B in 9 months

MANILA, Philippines - Gokongwei-owned food maker Universal Robina Corp. (URC) reported a 24-percent profit drop in the first nine months of its fiscal year ending September 2011 to P4.9 billion as it struggled with rising commodity costs.

URC said its earnings were slammed by the global increase in commodity prices that have hit companies across the corporate spectrum as well as the decline in market values of bond investments.

Higher costs were partly offset by selling price increases and profit improvement initiatives on the company’s products, URC said.

Consolidated net sales and services rose 17.7 percent from October 2010 to June this year to P50.58 billion, on the back of robust growth of URC’s operations overseas as well as strong showing of its commodity foods group. This, however, was tempered by the modest growth of the company’s domestic branded business with soft sales in beverages and a decline in the agro-industrial group as it entered the down cycle.

Sales of its international branded consumer Foods business expanded 35.3 percent to P14.41 billion from P10.65 billion, led by Vietnam and Thailand’s outstanding performance which rose 47.4 percent and 32.7 percent, respectively. In dollar terms, sales reached $331 million for the first three quarters, an increase of 43.3 percent over the previous level.

While solidifying its leadership in biscuits in Thailand and sustaining the strong demand for its ready-to-drink C2 tea product in Vietnam, URC continues to successfully build its product portfolio across the ASEAN region.

Its Philippine branded operations improved five percent to P21.85 billion, mainly driven by buoyant sales from snack foods, double-digit growth in biscuits, cakes and chocolates.

The commodity foods group performed well with sales growing 43.1 percent to P7.93 billion as the sugar business sustained sales growth of 74.2 percent while the flour business improved 8.5 percent as a result of multiple price increases to offset the high cost of wheat in the world market.

Net sales of URC’s agro-industrial group amounted to P5.095 billion, down 4.9 percent. The feeds business managed to increase 22.6 percent to P2.54 billion while the farm business dropped 22.2 percent due to low volumes and depressed selling prices for hogs.

URC’s balance sheet remains healthy with a net cash of P3.89 billion.

The branded consumer foods segment distributes a diverse mix of snack, chocolate, candy, biscuit, bakery, beverage, noodles and tomato-based products while the agro-industrial products segment operates three divisions, which engage in hog and poultry farming, the manufacture and distribution of animal feeds, glucose and soya products, and the production and distribution of animal health products.

Its commodity food products segment engages in sugar milling and refining through its sugar divisions and flour milling and pasta manufacturing through URC flour division.