Universal Robina Corporation (PSE: URC) posted net sales of PhP67 billion, a 4% increase versus the same period last year for the first half of the calendar year 2019, driven by the strong growth in the Philippines.
URC operating income (excluding hogs market valuation) grew by 8% to PhP7.6 billion with margins improving by 41 basis points versus last year. Growth in operating income was led by Branded Consumer Foods (BCF) Philippines. Margins improved across consumer, industrial and international divisions. URC Net Income amounted to PhP5.4 billion, a growth of 9% versus same period last year, driven by the growth in operating income with offsets coming from forex loss and higher finance cost.
URC’s financial position remains strong with ending cash balance of PhP10.7 billion and gearing ratio at a comfortable 0.48 level. Net debt of PhP28.7 billion is mainly attributable to the remaining debt associated with the Oceania acquisitions.
SALES PERFORMANCE PER BUSINESS
Branded Consumer Foods (BCF): Sales of domestic and international branded consumer foods grew by 4% versus the same period last year, amounting to PhP51.5 billion. Domestic revenues increased by 10% and operating income rose 15%. This was led by double digit growth in Coffee, Snacks and joint venture businesses. International revenues declined by 4% in peso terms due to adverse foreign exchange translation, but international operating income still grew by 2% versus last year as margins expanded by 46 bps despite weaker topline.
Agro-Industrial & Commodities (AIC): The agro-industrial & commodities businesses continue to be a relevant and consistent contributor to total URC. Sales amounted to PhP14.8 billion, a 5% increase versus last year while Operating Income grew by 3%. Agro-Industrial sales grew strongly by 20% driven mainly by higher feeds sales. Flour sales also posted a strong 19% growth. Sugar & Renewables (SURE) sales declined by 12% due to a different phasing of external sugar sales this year versus last year.
KEY PRIORITIES – FOCUS ON PERFECT EXECUTION
Irwin Lee, URC President and CEO said “We are pleased that our top strategic priority to pivot our Philippines branded consumer foods division back to strong growth continues to be on track. The route-tomarket and product supply chain transformation programs we identified and addressed the past year have started to bear fruit; but we need to continue our focus on perfect execution. Our brand building and innovation efforts on our biggest core categories are yielding market share gains. Strength in our core gives us the foundation to expand into adjacencies and build our portfolio across markets.