URC enters power gen business

MANILA, Philippines - Universal Robina Corp. (URC), the food manufacturing arm of Gokongwei-led conglomerate JG Summit Holdings Inc., moves a step closer to entering the power generation business for the first time.

The firm will invest $60 million for a power generation plant in its sugar mill in Visayas as it secures shareholder approval for the power venture.

The plant, which will use bagasse or waste in sugarcane milling as feedstock, will start commercial operations in 2014, said Rene P. Cabati, general manager of the sugar division of URC. It will be located at the sugar mill of Southern Negros Development Corp. in Kabankalan, Negros Occidental.

URC chairman James L. Go said the company allotted $1.5 million per megawatt (MW) or around $60 million for the 40-MW co-generation power plant in Negros Oriental.

“If it does well, we have more sugar mills [that can host power plants],” Go said.

To date, URC has five sugar mills that account for 12 percent of the country’s sugar output.

URC secured shareholders approval yesterday for the amendment of the company’s articles of incorporation. The board of directors approved last November the inclusion of power generation as a business venture of URC.

Go said URC will use 20 MW of the power plant’s output, with the excess capacity to be sold to the main grid.

The first phase will allow the company to sell around four to five MW to the grid, Cabati said.

“It will be positive of course (to the bottom line),” Go said.

Asked for other investments in the power sector aside from the co-generation power plant, Go said: “The power sector is a major sector of the economy. We are always looking at major sectors.”

In its fiscal year 2012 that ended last September, URC posted a net income of P7.736 billion, up 66.9 percent from P4.636 billion a year ago. Consolidated sale of goods and services rose six percent to P71.202 billion from the same period a year ago due to strong sales of its branded foods.

URC, the company behind brands like Jack n’ Jill, Hunt’s, C2, Blend 45, Uno Feeds and Cream All, has budgeted P5 billion for capital expenditures in fiscal year 2013, slightly lower than the P5.1 billion a year ago.

Of the capital expenditures, P4.305 billion will be used for the installation of new lines to expand capacities in the snack foods and grocery products. It is also for the modification of existing beverage facilities in the Philippines, new beverage and bakery lines in Vietnam and expansion of salty snacks, chocolates, biscuits and wafer lines in Thailand, Indonesia and Malaysia.

The remaining P445 million and P250 million will be used by the commodity group for maintenance capital expenditures and by the agro-industrial group for farm expansion and handling facilities for feeds division, respectively.