URC 1Q FY2016 Operating Income Up 16%
Quezon City—(PHStocks)—Universal Robina Corp. (PSE: URC) reported an 11.3% sales growth for the first three months of fiscal year 2016 (beginning October 2015 and ending September 2016) with net sales amounting to PhP29.987 billion.
URC’s strong sales was mainly driven by branded foods and complemented by sugar/renewables and feeds. Philippine branded consumer foods (BCF) business increased sales by 5.8% while International branded consumer foods recorded a 19.2% growth. (The BCF international sales has a lower base of 45 days for Griffins last year vs 90 days for the quarter).
Sales of non-branded consumer foods group increased by 16.6% for the period, driven by the contribution of sugar/renewables (bioethanol and biomass cogen power) and feeds which grew 72.8% and 22.7% respectively.
URC’s operating income was at PhP5.142 billion for the first three months of fiscal year 2016. This is 16.1% higher than the PhP4.427 billion posted in the prior year as lower input prices (palm oil, creamer, robusta bean, PET resin) and better cost management resulted in margin expansion for branded foods.
URC’s net income for the first three months of fiscal year 2016 reached PhP4.792 billion, a 47.3% increase against prior year. Growth was faster than operating income as we booked unrealized forex gains and market valuation of financial assets mainly from the gain of Griffins debt currency forward hedge. The company continues to be in a net debt position of PhP6.471 billion with a financial gearing ratio of 0.42 as the company continues to hold the long term debt used for the Griffins acquisition. We also spent PhP2.278 billion on capital expenditures which was mostly invested to add capacities for our branded foods business.
Sales performance by business:
URC’s branded consumer foods (BCF) group, including the packaging division, increased sales of goods and services by 10.3% to PhP24.995 billion for the first three months of fiscal year 2016, compared to the PhP22.669 billion posted in the prior year.
BCF Philippines recorded modest sales growth of 5.8% in the first three months of fiscal year 2016 amounting to PhP15.695 billion, vs. PhP14.840 billion in the prior year.
URC is still experiencing the effect El Nino showing minimal growth in Mindanao area and wholesaler accounts. which covers traditional sari-sari stores. Lastly, aggressive moves of competitors to recover or gain market shares was felt across all categories especially on snackfoods and coffee. Beverage remains to be the main driver for growth, with C2 performing very well while the domestic business showed mixed results with Chocolates and Noodles growing double digits while snacks, bakery and candies at low single digits.
URC’s International BCF business registered sales of PhP8.985 billion for the first three months of fiscal year 2016, a 19.2% increase. Vietnam, Indonesia and New Zealand contributed to the strong top-line growth. Thailand was down 2.3% due to lower sales of biscuits. Indonesia sales was up 15.3% on the back of core brands Piattos and Cloud 9 Crunch. With the unusual hot weather in South and Central Vietnam, Vietnam continues an upward trend posting a growth of 10.6% on the back of ready-to-drink beverage C2 and the robust sales of energy drink brand, Rong Do. URC continues to be number one in biscuits and wafers in Thailand and the number one ready-to-drink tea brand in Vietnam.
Griffins, on the other hand, posted a 6.3% percent growth in volume coming from both the domestic New Zealand and Australia exports markets.