Universal Robina Corporation (PSE: URC) Net Income for the April-June 2020 quarter came in at PhP3.8 billion, +76% versus last year, on the back of strong operating performance and foreign exchange gains. Operating income of PhP4.3 billion was up +16% versus last year, driven by positive category mix and disciplined cost control amid the pandemic. Despite the prevailing COVID-19 situation, Net Sales reached PhP34 billion, up 1% versus last year, as strong growth in Snackfoods, Noodles, Powdered Drinks, Animal Feeds, Flour and Sugar offset out-of-home consumption declines in Candies and Ready-To-Drink (RTD) Beverages.
For the calendar year-to-date results of the first semester, Net Income grew +13% versus last year to PhP6 billion, driven by an 8% increase in Operating Income to PhP8.2 billion and lower foreign exchange losses. Net Sales continued to hold up at PhP67.4 billion, with better than expected delivery coming from the divisions of Branded Consumer Foods Philippines; Agro-Industrial & Commodities; and the Unisnack Oceania and Nissin-URC joint ventures.
URC’s financial position remains strong, with PhP18.7 billion of cash as of June 30, and gearing ratio remaining comfortable at 0.38x. Net debt also improved, amounting to PhP17.1 billion, reducing significantly by PhP11.5 billion versus a year ago due to strong operating cashflow and proceeds from the Unisnack Oceania transaction. Dividends of PhP6.9 billion were paid out as planned in the first semester.
1H Sales Performance Per Business
Branded Consumer Foods (BCF): First semester Sales of domestic and international Branded Consumer Foods reached PhP50.9 billion. Domestic revenues grew +2% as sales were driven by strong growth in Snacks, Bakery, Coffee, Powdered Chocolate and Noodles versus out-of-home consumption declines in Confectionery, RTD Beverages and Food Services. Operating Income grew faster by +14% versus last year driven by a favorable price/cost mix, coupled with OPEX control and cost savings. International revenues declined by 3% on a constant currency basis and by 9% in peso terms, driven by the negative impacts of COVID-19 in Indochina, while Operating Income declined by 6%. However, International profits in Q2 grew by 20%, tapering overall decline in the first half, due to buoyant sales in Oceania and cost control measures across all countries.
Agro-Industrial & Commodities (AIC): The Agro-Industrial & Commodities businesses continue to be a relevant and consistent contributor to total URC. Sales for the first half amounted to Php16.5 billion, a +13% increase versus last year while operating income grew by +11%. The Commodities Foods Group revenue grew strongly by +26% versus year ago, with Sugar & Renewables (SURE) growing +31% and Flour growing +12%. These were offset by Agro-Industrial Group’s sales decline of 3%, due to the previously announced downsizing and lower volumes in hogs.
Managing Through the Crisis
Irwin Lee, URC President and CEO, said, “The current uncertainty driven by COVID-19 is still evolving but we are motivated by the fact that business results in the first half turned out better than our severe lockdown forecasts. While we have business continuity plans quickly set in motion, we were bracing for the worst due to quarantine restrictions, supply chain disruptions and fast demand shifts. Fortunately, our focus on execution and the heroic efforts of URC people and partners helped us deliver essential food and drinks to customers, consumers, communities and frontliners.”
“Managing through this crisis requires continued vigilance, agility and flexibility. While we may have weathered the first wave of this crisis, we must continue securing the here and now, while also preparing for the recovery efforts for the balance of the year and beyond.”