URC earns slightly less in Oct-Dec

MANILA, Philippines - Universal Robina Corp. (URC) reported slightly lower earnings at P2.3 billion in the October to December period last year.

The strong peso offset the increase in operating income of the food manufacturing arm of Gokongwei-led conglomerate JG Summit Holdings Inc.

“URC’s net income for the first quarter of fiscal year 2013 reached P2.295 billion, a decrease of 2.8 percent from the P2.362 billion posted in the prior year,” URC said.

Operating income surged 19.5 percent to P2.34 billion from P1.958 billion a year ago, driven by better performance of the branded foods business.

However, profits were cut by the stronger peso. URC earns foreign currency from its sales in countries like Vietnam, Thailand, Indonesia and Malaysia.

“The slight decline in net income was due to unrealized foreign exchange losses as a result of the continued appreciation of the local currency,” URC said. In the first quarter of fiscal year 2012, profits surged 75.6 percent from P1.35 billion a year ago, driven mainly by the increase in market value of bond and equity holdings of the company, and exchange gains.

A strong peso, while making imports cheaper, also trims the value of dollar export earnings and remittances from overseas Filipinos when converted into local money.

In the first quarter of the current fiscal year that will end in September, URC said its net sales grew 11.8 percent to P20.098 billion.

URC said the Philippine branded consumer foods business, whose sales climbed 18.5 percent to P9.93 billion on the back of strong beverage sales, was the main factor for the company’s growth despite being tempered by the international branded food segment.

“The company remained the dominant market leader in salty snacks, candies, chocolates and ready-to-drink tea in the Philippines,” the listed firm said.

Net sales of the international branded consumer foods rose 4.9 percent to $129 million but growth was underpinned by the strong peso.

URC said the commodity foods group grew its revenues roughly 30 percent to P2.446 billion while the agro-industrial group posted a 9.6-percent sales uptick to P2.1 billion.

The food manufacturing giant will invest $60 million for a power generation plant in its sugar mill in Negros Occidental. The plant, which will use bagasse or waste in sugarcane milling as feedstock, will start commercial operations in 2014.

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 for 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.