URC beefs up capex to P9B

MANILA, Philippines - After posting strong earnings growth last year, snacks and beverage giant Universal Robina Corp. (URC) is beefing up spending for its 2015 fiscal year to bolster business operations in the Philippines and abroad.

In a disclosure to the Philippine Stock Exchange, the food manufacturing arm of the Gokongwei family said it is allocating about P9 billion for capital expenditures (capex) and investment for fiscal year 2015, higher than its P7.697 billion capex budget in 2014.

Bulk of URC’s spending in its fiscal year ending September 2015, or about P6.5 billion, will go to the installation of new lines to expand capacities in the snack food and beverage businesses in the Philippines, new lines for beverage, snacks and candy products in Vietnam, and expansion of wafer and snack lines in Thailand and Indonesia.

The company is also earmarking some P2 billion for its commodity food group which will inject the fund to complete a power cogeneration plant, construct a flour plant, and for maintenance capex.

The remaining P500 million, meanwhile, will go to its agro-industrial group which consists of farm improvements and handling facilities for feeds division.

For its fiscal year 2014, URC’s capex was spent for additional investments in new facilities and capacities across the company’s branded foods business, bio-ethanol facilities and biomass cogeneration.

With such expansion, URC said its net income from October 2013 to September 2014 jumped 15.1 percent to P11.56 billion from P10.05 billion during the same period the previous year.

Net sales also rose 14.1 percent year-on-year to P92.38 billion on the back of robust sales in its branded consumer food group (BCFG).

“BCFG Philippines was the main driver of the growth as net sales increased by 24.1 percent while BCFG International managed to post a growth of 7.8 percent. Non-branded consumer foods group net sales declined by 2.9 percent due to lower sugar volumes,” URC said.

URC said BCFG in the Philippines ended the fiscal year with P52.35 billion in net sales as all segments contributed to the growth led by the beverage division, which increased 38 percent.

Net sales from its international BCFG, meanwhile, stood at P23.78 billion with growth driven by Thailand and Vietnam.

“Thailand managed to grow despite weak consumer sentiment brought about by its macro-political issues. URC launched more affordable products (smaller pack sizes for biscuits) as well as implemented continuous promotional campaigns,” URC said.

“Vietnam posted modest growth, bucking the decline in the country’s total fast moving consumer goods (FMCG) industry, as new product offerings gained traction. URC Vietnam was also able to protect market share from new entrants by launching C2 Oolong,” the Gokongwei-led firm added.

Aside from Thailand and Vietnam, URC said Indonesia continues to show promise with core snack food growing 11 percent year-on-year.

URC is one of the largest branded consumer food and beverage product companies in the Philippines and also has a significant and growing presence in the Southeast Asian markets.

The company is behind top brands such as Jack n’ Jill, Hunt’s, C2, Blend 45, Uno Feeds and Cream All.