URC Reports 18% Growth in 9M FY2015 Sales

Manila—(PHStocks)—Universal Robina Corp. (PSE: URC) reported an 18.3% sales growth for the first nine months of fiscal year 2015 with net sales amounting to PhP81.943 billion. URC’s strong sales was mainly driven by branded foods and complemented by sugar and feeds.

Philippine branded consumer foods (BCF) business increased sales by 10.9% while International branded consumer foods recorded a 38.4% growth with the consolidation of Griffin’s New Zealand results starting mid-November upon closing of the acquisition. Sales of URC’s non-branded consumer foods group increased by 12.5% for the first nine months of fiscal year 2015 due to increase in sales volume for sugar and feeds, which grew 39.4% and 19.9% respectively.

URC’s operating income was at PhP13.059 billion for the first nine months of fiscal year 2015. This is 24.1% higher than the PhP10.524 billion posted in the prior year as lower input prices (palm oil, creamer, PET resin) and additional operating leverage resulted in margin expansion for branded foods.

URC’s net income for the first nine months of fiscal year 2015 reached PhP9.654 billion, a 11.8% increase against prior year. Growth was slower than operating income as the company booked higher net finance cost, equity share in net losses of joint ventures we started recently namely Calbee-URC Inc. and Danone Universal Robina Beverages Inc. and unrealized foreign exchange losses mainly coming from our Indonesia operations. The company is now in a net debt position of PhP14.807 billion with a financial gearing ratio of 0.46 (vs. 0.16 in FY14) as the company financed the Griffin’s acquisition via long term debt. URC also spent PhP6.545 billion for cash dividends and PhP3.977 billion on capital expenditures, which was mostly for branded foods.

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 19.5%, to PhP68.827 billion for the first nine months of fiscal year 2015, vs. the PhP57.583 billion posted in the prior year.

BCF Philippines recorded double-digit sales growth of 10.9% in the first nine of fiscal year 2015 amounting to PhP43.138 billion, vs. PhP38.885 billion in the prior year. Beverage remained to be the main driver backed by the continued growth of our powdered beverage business mainly coming from coffee partly offset by the slower growth of Ready to Drink beverages due to capacity constraint. The domestic business also generated mixed results from snackfoods with salty snacks growing double digits while bakery and confectioneries at low single digits. Noodles from the grocery division posted strong double digit growth.

URC’s International BCF business registered sales of PhP24.838 billion for the first nine months of fiscal year 2015, a 38.4% increase. Thailand, Vietnam and Indonesia contributed to the strong top-line growth. The company also started consolidating Griffin’s into URC International starting mid- November upon closing of the acquisition. Thailand posted double digit growth of 11.7% despite a relatively weak macro environment and consumer sentiment backed by our core brands, new products launches and continuation of promotional activities. Indonesia sales was up 28.6% on the back of successful new product launches for chocolates and snacks. Vietnam showed signs of recovery posting a growth of 7.6% with ready-to-drink beverage category now up vs. last year driven by 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 six percent growth for its current calendar year (starting January) coming from both the domestic New Zealand and Australia exports markets.

URC’s non-branded consumer foods business, commodity foods group and agro-industrial group, posted revenues of PhP13.116 billion for the first nine months of fiscal year 2015, an increase of 12.5% against last year. This was mainly due to the 17.7% increase in revenues for commodity foods.

The sugar business grew revenues by 39.4% due to higher volumes, while growth in flour business was flat vs. same period last year. Net sales for the agro-industrial group increased by 7.9% due to good sales volume for feeds, which grew by 19.9%, while the farms business posted flattish growth.