URC earnings up 14.4% to P6.22 B

MANILA, Philippines - Strong domestic and international sales of its branded products propelled the double-digit profit growth of Universal Robina Corp. (URC) in the first half of its current fiscal year.

The snacks and beverage giant controlled by the Gokongwei family said earnings for the October to March period jumped 14.4 percent to P6.22 billion from P5.441 a year ago while net sales climbed 13.5 percent to P45.74 billion in the six-month period.

“The Branded Consumer Food Group (BCFG) Philippines continued to be a key driver as net sales increased by 26.7 percent,” URC said. BCFG International also managed to post double-digit growth, which offset the decline in the non-branded consumer foods group.

URC is the company behind market-leading brands Jack n’ Jill, Hunt’s, C2, Blend 45, Uno Feeds and Cream All.

Operating income surged 42.2 percent to P7 billion for the first half of fiscal year ending September as URC benefited from “relaxed input prices, higher sales volume and increasing scale which resulted in margin expansion of 310 basis points against same period last year.”

However, income growth was slower than operating income given market valuation loss and the drop in net finance revenue in line with the disposal of all bond investments and a significant portion of equity investments.

For its core business, BCFG, excluding the packaging division, reported a 20.9-percent sales uptick to P37.38 billion.

“BCF Philippines finished the first half of the fiscal year strong with P25.62 billion in net sales, a 26.7-percent growth versus last year, driven by growth across all segments led by beverage division, which managed to grow by 42.2 percent,” URC said.

“The increase in beverage sales was driven by the powdered beverage business, mainly from coffee, and complemented by the ready-to-drink business,” URC said, adding that snack food sales rose 18 percent as salty snacks, bakery, and confectionery segments posted growth.

Sales of BCF International gained 9.9 percent to P11.76 billion in the six-month period, driven by operations in Thailand and Vietnam.

“Thailand growth occurred despite the weak macro environment and the political turmoil in the country mainly due to new product launches,” URC said, adding that Vietnam showed signs of recovery.

The non-branded consumer foods business, which is composed of the commodity foods group and the agro-industrial group, recorded P7.9 billion in net sales, down 10.3 percent from a year ago.

URC said it was dragged by the 24.3-percent decline for the commodity foods group’s sales to P3.8 billion while the flour business rose 6.3 percent due to higher volume. The sugar business slumped 44.6 percent on low sugar cane production due to the unusual wet season.

The company budgeted about P9 billion for capital expenditures for this year, higher than the P5.54 billion for fiscal year 2013, P5.12 billion for 2012 and P4.55 billion for 2011.

Specifically, URC allotted P5.73 billion for the installation of new lines to expand capacities in the snack foods and grocery products in the Philippines; new manufacturing plants, beverage and bakery lines in Vietnam; and expansion of biscuits and wafer lines in Thailand.