Universal Robina improves profits even as snack sales tempered

MANILA, Philippines — Snack maker Universal Robina Corp. grew profits by double-digit in the first 9 months, but a slowdown in domestic sales reflected consumption weakness prevalent during the health crisis.

In a disclosure to the stock exchange, the Gokongwei-led firm reported a net income of P8.1 billion as of September, up 12% compared to the same period last year. Lower debt and intereste expense as well as a strong peso buoyed the company’s financial performance.

Investors appeared to be satisfied with the latest financial results. On Friday, shares in Universal Robina gained 1.21% to end the week at P141.70 each.

That said, the company is not surviving the pandemic unscathed. Sales of its flagship branded consumer foods, including biscuits and other confectionaries, barely grew by 1% domestically to P46.5 billion, while declining 7% overseas to P30 billion.

Similar with other companies, Irwin Lee, president and chief executive, said Universal Robina has struggled to operate during the hard times even with most lockdowns technically lifted.

“Weaker consumer sentiment and slowing retail sales in Q3 (third quarter), plus sluggish macroeconomic fundamentals, are weighing on a slower path to market recovery,” he said in a statement.

Sought for comment, April Lee Tan, research head at COL Financial said, the confectionary suffered from closures of convenience stores where its products are able to reach consumers better by getting sold in a piecemeal basis. “URC suffered from double-digit decline in sales of candies and RTD (ready-to-drink) tea (C2) so those were the main drags,” she said.

On the bright side, nine-month sales of Universal Robina’s agro-industrial & commodities businesses reached P22.3 billion, up 9% year-on-year, financial results showed.

Overall, the company’s operating income from January to September jumped 8% annually to P11.9 billion on the back of “better cost management and favorable input prices” that offset spending on brand building and roughly P300 million coronavirus-related expenses to ensure business was running.

“Despite these challenges, we remain focused on operational excellence, business transformation, and investing in building stronger brands and innovation to fuel growth,” Lee said.

“This focus is helping us perform ahead of market trends.  More importantly, this enables us to continue supporting and partnering with our customer and suppliers to serve the needs of our consumers and communities in this time of crisis,” he added.