URC FY2012 Net Income Up 62.9% to PhP8.158B

URCPasig—(PHStocks)—Universal Robina Corp. (PSE: URC) reported a 6% sales growth for fiscal year 2012 (fiscal year beginning October 2011 and ending September 2012) with net sales amounting to PhP71.202 billion, up from PhP67.168 billion in the prior year. URC’s flagship branded consumer foods (BCF) remained to be the main driver for total company growth as BCF Philippines increased sales by 16.2% for FY2012. However, slower sales growth from BCF International and a decline in sales for the sugar division tempered the company’s overall top-line performance.

URC was able to hit its operating income of PhP7.801 billion for FY2012. This is 13.2% higher than the PhP6.889 billion reported in the prior year. The increase comes on the back of significant contribution from the branded foods business due to better volumes and scale as well as lower input prices compared to the previous year. The agro-industrial business improved its numbers as well while commodity foods group maintained.

URC’s net income for FY2012 reached PhP8.158 billion, an increase of 62.9% from the PhP5.008 billion posted in the prior year. Aside from better operating income, the increase was due to higher market values of bond and equity holdings.

The company’s balance sheet remains healthy with strong cash levels. At fiscal year-end, URC was in a net cash position of PhP5.913 billion with a financial gearing ratio of 0.32 (vs. 0.44 in FY11) as the company retired its $200 million debt during the fiscal year.

Sales performances by business are as follows:

URC’s branded consumer foods (BCF) group, including the packaging division, increased sales of goods and services by PhP5.699 billion, or 11.3%, to PhP56.257 billion for FY2012, compared to the PhP50.558 billion posted in the prior year.

BCF Philippines exceeded expectations and posted significant growth of 16.2% to register full-year sales of PhP34.351 billion, compared to PhP29.57 billion in the prior year. The growth was largely driven by the beverage division due to the stellar performance of its coffee business coupled with the recovery of its ready-to-drink beverage business. The snackfoods division posted growth as well with salty snacks leading the way, complemented by biscuits and candies. The company remained the dominant market leader in salty snacks, candies, chocolates and RTD tea in the Philippines.

Net sales of URC’s international BCF business increased by 6.3% (in dollar terms) to end at $471 million, or PhP20.157 billion, for FY2012. Vietnam was the primary driver as it registered double-digit sales growth on the back of its ready-to-drink beverage business, the main contributor to top-line. Indonesia also contributed as it built some sales momentum due to the company’s renewed entry into salty snacks, particularly on the extruded/pelletized front. However, overall top-line growth was tempered by Thailand’s softer sales as the effects of the prolonged flooding resulted in a decline in overall industry consumption for biscuits and wafers, the main categories, which are discretionary in nature. URC remains to be the number one player in these two categories and the company has started to implement initiatives to accelerate the recovery.

URC’s commodity foods group revenues amounted to PhP7.575 billion for FY2012, down by 20.5% from PhP9.53 billion in the prior year. This was mainly due to a 39.9% decline in net sales of the sugar business as a result of lower volume and prices, while the flour business grew by 8.4% due to higher volume and selling prices compared to the same period last year.

Net sales of URC’s agro-industrial group amounted to PhP7.37 billion for FY2012, a 4.1% increase from the prior year. The feeds business only grew slightly by 2.4% due to the exit of some backyard raisers brought about by depressed pork prices during the early part of the year. The farms business, on the other hand, increased sales by 5.7% on the back of better volumes, which was augmented by the improvement in pork prices towards the end of the year.

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