URC Net Income Up by 38.7% for First Nine Months of FY2013

Quezon City—(PHStocks)—Universal Robina Corporation (PSE: URC) has reported a 13.3% sales growth for the nine months of fiscal year 2013 (fiscal year beginning October 2012 and ending September 2013) with net sales amounting to PhP60.092 billion, mainly driven by URC’s Philippine branded consumer foods (BCF) business, which increased its sales by 22.4% during the period. Growth was further buoyed by strong sales coming from the company’s sugar and farms businesses, which registered growth of 42.2% and 21.4%, respectively, for the time period.

URC’s operating income was at PhP7.636 billion for the nine months of fiscal year 2013. This is 32.1% higher than the PhP5.78 billion posted in the prior year. Lower prices of soft commodity inputs and double-digit increase in sales volumes resulted in margin expansion for branded foods while the sugar business benefited from the early start of the milling season and farms from better selling prices of hogs.

URC’s net income for the nine months of fiscal year 2013 reached PhP8.495 billion, a 38.7% increase from the PhP6.126 billion posted in the prior year. Aside from higher operating income, the increase was due to higher other revenues as the company booked realized one-time gains from the sale of its investment portfolio last January 2013 and lower finance cost due to short and long term debts retirement.

The company’s balance sheet remained healthy with strong cash levels. As of the nine months, URC continues to remain in a net cash position of PhP5.486 billion with a financial gearing ratio of 0.06 (vs. 0.32 in FY12) as the company paid a significant portion of its debt obligations.

Sales performance by business are as follows:

URC’s branded consumer foods (BCF) group, including the packaging division, increased sales of goods and services by PhP5.955 billion, or 14.3%, to PhP47.652 billion for the nine months of fiscal year 2013, vs. the PhP41.697 billion posted in the prior year.

BCF Philippines sustained its robust sales and posted growth of 22.4%, to register nine months sales of PhP30.873 billion, vs. PhP25.221 billion in the prior year. Beverage continued to be the key driver backed by the strong performance of the Great Taste coffee business and C2 ready-to-drink beverage. The company remained to 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 10.5% (in dollar terms) to end at $387 million or PhP15.938 billion for the nine months of the fiscal year 2013. Vietnam sales remained robust driven by ready-to-drink beverages (C2 and  Rong Do) and contributions coming from the build-up of the snackfoods business. Indonesia sales increased significantly driven by salty snacks and chocolates while the Thailand business is on its way to recover, albeit at a slower pace. URC continues to be the market leader in biscuits and wafers in Thailand while C2 is now the number one RTD Tea brand in Vietnam.

URC’s commodity foods group revenues amounted to PhP6.86 billion for the nine months of fiscal 2013, up by 16.5% from PhP5.888 billion in the prior year. This was mainly due to the 42.2% increase in revenues of the sugar business due to the early start of the milling season and volume contribution coming from the recently acquired mill, Tolong, while the flour business declined by 5.8% as the increased level of low cost imported flour affected the business.

Net sales of URC’s agro-industrial group amounted to PhP5.58 billion for the nine months of fiscal year 2013, a 2.1% increase from the prior year. The farms business grew significantly by 21.4% due to better selling prices. The feeds business, on the other hand, posted a decline of 16.9% due to lower volumes brought about by the relatively lower population of backyard hog raisers and increased competitive pressures.