URC Grows Topline by 4%, Sustains EBIT Margins at 15.7%

Quezon—(PHStocks)—Universal Robina Corp. (PSE: URC) registered net sales of PhP85.373 billion for the nine months of fiscal year 2016 (beginning October 2015, and ending September 2016), a growth of 4.2% driven by Branded Consumer Foods (BCF) Philippines, Indonesia, Griffin’s, and Renewables. BCF Philippines including the Packaging division grew in line at 4.4%, while BCF International was flat as challenges in Vietnam dragged down results of the international branded business. Sales of Non-Branded Consumer Foods Group, composed of Agro-Industrial Group and Commodity Foods Group were up by 12.8% due to the incremental contribution of Renewables which increased by 223.8%.

Operating Income of URC was slightly up by 2.5%, amounting to PhP13.384 billion. EBIT margin was also sustained at 15.7% as a result of lower input prices on the BCF business.

URC posted net income of PhP12.199 billion, a growth of 26.4% driven by one-offs with unrealized forex gains on NZD, appreciation of IDR, and realized market valuation of financial instruments due to partial prepayment of the long term debt in New Zealand.

The Company is still in a net debt position of PhP12.318 billion with a financial gearing ratio of 0.31. Capital expenditures were at PhP6.024 billion, spent mostly on the capacity expansion for BCF, and the acquisition of the Balayan mill for Sugar.

Sales Performance Per Business

Branded Consumer Foods (BCF) Group

Sales of BCF excluding Packaging increased by 2.6%, amounting to PhP69.734 billion for the nine months of fiscal year 2016.

BCF Philippines, excluding Packaging topline grew by 4.5%, amounting to PhP45.081 billion. Ready-To-Drink (RTD) Beverage was the fastest growing category on the back of strong sales from water, juice, and RTD Tea strong. Powdered beverage, coffee in particular still posted a decline because of the instant coffee segment. Great Taste White coffee mix meanwhile continued to post growth with the strong acceptance of our Twin Pack format which added to total sales. This brand remains a very strong challenger in the category. Total snackfoods increased by mid-single digit driven by bakery and chocolates, while salty snacks and candies remained flattish. Sales of our joint venture companies Nissins and Danone were also strong with Nissins Cup Noodles and our waterplus brand Blue getting significant traction.

BCF International sales were flat at PhP24.653 billion vs. last year’s net sales of PhP24.838 billion as regulatory issues in Vietnam negatively affected the total international business performance. On a positive note, most countries managed to grow sales in local currency terms. Indonesia was up by 24.9% driven by snacks and chocolates. Thailand increased by 1.7% as consumer confidence has started to recover in the country. Malaysia grew by 8.1% with double-digit growth on Wafers and Candies. Singapore was up by 8.9% on the back of incremental sales from Griffin’s. New Zealand sales have also started stabilizing through improved pricing and margins, coupled with new product developments introduced into the market.

Non-Branded Consumer Foods Group

Sales of the Non-Branded Consumer Foods Group reached PhP14.798 billion for the nine months of fiscal year 2016 vs. PhP13.116 billion last year, up by 12.8% driven by Renewables and Feeds.

Commodity Foods Group’s sales increased by 23.4%, amounting to PhP7.967 billion. Sugar and Renewables (SURE) sales grew by 47.2% while Flour sales were flattish as the increase in sales volumes of pasta and flour was offset by lower combined selling prices of the business.

Agro-Industrial Group’s sales had a slower growth at 2.6% as the decline in Farms was pushed up by the performance of Feeds. Farms was down by 14.1% as both sales volume and average selling price of hogs decreased. In contrast, Feeds was up by 23.4% driven by higher sales volume of hog feeds, dog food and game fowl feeds supported by marketing activities implemented for the period.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.