URC earnings drop 15% to P9.5 billion in 2018

MANILA, Philippines — Universal Robina Corp. (URC), the Gokongwei-led snack foods giant, reported a 15 percent decline in net income last year to P9.5 billion, weighed down by lower operating income as a result of foreign exchange loss due to a weaker peso.

Net sales increased by two percent to P127.8 billion, not enough to push the company’s profit up.

Sales were driven by the agro-industrial and commodities (AIC) divisions, the recovery in Vietnam and the  consistent performance of Australia.

Operating income, excluding hogs market valuation, fell seven percent to P13.8 billion as a result of lower sales volumes mainly in coffee and higher selling and distribution expenses in the Philippines.

Higher input costs and expenses in the farm, feeds and flour divisions likewise affected URC’s operating income.

The company’s financial position remains strong with ending cash balance of P13 billion, while net debt position reached P26.4 billion due to the remaining debt associated with the Oceania acquisitions.

URC president and chief executive officer Irwin Lee said the company has set strategies that would pivot the business back to achieving sustainable growth.

“Executing our transformation programs well will be key to deliver a step change in our performance in 2019 and beyond,” he said.

Lee expects stronger topline growth this year with stronger commercial initiatives and a better macro environment in the Philippines.

Among the different business segments, the branded consumer foods (BCF) group registered P101 billion in sales.

Domestic revenues declined two percent to P58.3 billion as the growth from snackfoods, ready-to-drink beverages and noodles were offset by the volume decline in coffee.

Internationally, sales grew one percent to P43.2 billion as Vietnam recovers and the sustained momentum of Australia offset restructuring related declines in New Zealand and Myanmar.

Meanwhile, sales from the agro-industrial and commodities group amounted to P25.2 billion, up 15 percent.

Lee said the company would reinvest cost savings and efficiencies into distribution and brand building activities, spearheaded by the recent relaunch of Great Taste White in the Philippines last Jan. 11.