URC earnings drop 12% to P3 billion

MANILA, Philippines — Listed food and drinks conglomerate Universal Robina Corp. (URC) reported a net income of P3 billion in the first quarter, down 12 percent year-on-year.

In a disclosure to the Philippine Stock Exchange (PSE) yesterday, URC said the first quarter net income was partly cushioned by foreign exchange gains as a result of the depreciation of the peso against the US dollar.

 URC registered P31.2 billion in sales in the first quarter, up two percent in the same period last year driven by the continuous recovery of the business in Vietnam and growth coming from its agro-industrial group.

“Total branded consumer foods (BCF) topline, including packaging division, was flat at one percent, while sales of non-branded consumer foods group (Agro-Industrial Group and Commodity Foods Group) were up three percent,” URC said.

Sales of core BCF (domestic and international), excluding packaging, reached P25.1 billion, an increase of one percent.

Meanwhile, revenues of BCF Philippines excluding packaging declined five percent to P14.3 billion which the company attributed to challenges in core snacking and coffee.

“Our core snacking categories of salty snacks, bakery, confectioneries declined by three for the quarter on the back of a very high base in first quarter 2017 where we posted a 16 percent growth,” URC said.

BCF International sales, on the other hand, grew 10 percent to P10.8 billion, driven by the recovery in Vietnam and growth of snack brands Australia.

 URC said sales in Vietnam grew 28 percent as it continued its path to recovery after its C2 bottled tea drink was hounded by lead content issues in 2016.

“Volumes continue to increase for our top brands C2 and RongDo while we continue to build our snackfoods portfolio,” URC said.

URC’s agro industrial division posted double digit sales growth, but this was offset by the lower sales of the commodity foods division including sugar and flour.

The commodity foods group’s topline, on the other hand, declined three percent to P3.1 billion.

Sugar and renewables also declined five percent due to lower average selling price of sugar, while flour posted a four percent growth driven by higher average selling prices and growth of pasta sales.

Operating income and margin pressure remains a challenge due to the weaker performance in the Philippines as a result of inflation.

“Operating income and margin pressure remains challenged with a decline of 14 percent amounting to P3.5 billion due to the weaker performance in the Philippines as a result of lower coffee sales volumes, higher inflation, and forex devaluation.

Core earnings before tax was down by 25 percent at P2.9 billion driven by lower operating income and increase in other expenses,” URC said.