URC exits China; delivers higher profit in 1st half

MANILA, Philippines — The Gokongwei Group’s listed snack food giant Universal Robina Corp. (URC) is bidding farewell to China.

URC, in a stock exchange filing, announced its strategic exit from China, where it operates its cereals and snacks businesses.

The company said its manufacturing and selling have already ceased in China, with full closure expected by 2025.

The company did not disclose the reason for its decision.

However, URC said that its exit from China would allow the company to redeploy resources to higher-growth markets across the region.

Philstocks Financial research and engagement officer Mikhail Plopenio told The STAR that the development is seen as a strategic move for URC given that China’s economy is still on its path to recovery.

He added that China is not one of the top URC markets.

“URC’s exit from China will allow it to explore other growth markets and may allow it to focus on its core existing markets while introducing new products,” Plopenio said.

“However, in the short term, the impairment loss may affect the company’s financial health,” he said.

Aside from the Philippines and China, URC also operates in Vietnam, Thailand, Myanmar, Indonesia, Malaysia, Singapore and Hong Kong.

URC discontinued its operations in New Zealand and Australia in 2021.

In its latest quarterly report, URC said that in June 2024, several Chinese entities ceased operations and abandoned their business activities.

“As a result, the related income and expenses of these entities for the period ended June 30, 2024 are presented as net income from discontinued operations in the consolidated income statements,” it said.

During the first half, URC reported a five percent increase in its core net income to P6.7 billion, as higher tax provisions offset operating income growth.

Net income from continuing operations increased by eight percent year-on-year to P7.6 billion on higher operating income and impairments in last year’s base.

Sales from January to June saw a three percent improvement to P80.7 billion, driven by higher sales volumes across all business units.

URC’s branded consumer foods group, excluding packaging and China, delivered higher sales of P54.7 billion as vital international markets continued growing despite Southeast Asia’s overall macroeconomic weakness.

Meanwhile, the agro-industrial and commodities group recorded sales of P25.5 billion, with higher volumes tempering significant price decreases for both sugar and flour.

“Against a challenged macroeconomic landscape, URC delivered volume-led growth and strong profits. The strength of our wide portfolio allows us to continue delighting our consumers with good food and beverage choices while also enabling us to reward shareholders with steadily increasing dividends,” URC president and CEO Irwin Lee said.

Lee said URC looks forward to the continued recovery of consumer sentiment in the remainder of the year.

URC declared a P1.90 per share dividend to stockholders on record as of Aug. 30 with the payout scheduled on Sept. 25. With this, the company has increased its yearly dividend per share by five percent per year over the past four years.

The company is behind iconic food and beverage brands such as Great Taste, C2 Cool & Clean, Piattos, Maxx candy and Cream-O cookies.