URC reports decline in profits

MANILA, Philippines—The Gokongwei-led food manufacturer Universal Robina Corp. saw a 28 percent year-on-year decline in consolidated net profit in the six-month period ending March 2011, the first semester of its fiscal year.

The drop was due to the decline in market values of bond and equity investments and lower operating income despite higher sales, URC disclosed to the Philippine Stock Exchange.

URC’s core earnings before tax—operating profit after equity earnings, net finance revenue and other income—amounted to P4.03 billion for the first half of fiscal year 2011, down by 10.8 percent from the same period last year.

Consolidated net sales and services for the semester amounted to P33.3 billion, up by 15.9 percent from a year ago. The largest contributor to the group’s sales revenue, URC’s branded consumer foods segment, including the packaging division, increased sales of goods and services by 17.1 percent to P24.77 billion in the first half of its fiscal year compared to a year ago.

This sales increase was due mainly to the strong performance of the international operations, which grew net sales by 45.3 percent in the first half to $215 million. In Philippine peso terms, net sales increased by 36.6 percent largely due to increase in sales volume. This was supported by strong sales growth in Vietnam, China, Thailand and Malaysia.

Domestic operations grew modestly by 5 percent in the first half to P14.6 billion. The increase in sales was largely driven by the strong performance of its snack foods category, which grew by 12.4 percent on account of growth in sales volume and increase in selling prices.

Net sales of URC’s agro-industrial group amounted to P3.25 billion in the first half, a 7.9 percent decline from last year. The feeds business grew by 20.1 percent to P1.63 billion because of increases in sales volume and selling prices.

Meanwhile, the farms business declined by 25.4 percent as sales volume and farm gate prices dropped. URC’s commodity foods group amounted to P5.27 billion in the first half, up by 30.8 percent from a year ago. This was primarily due to the 52.3 percent jump in net sales of the sugar business in turn driven by higher sales volume and better prices. The flour business also grew by 4.5 percent as result of price increases.

URC’s operating income decreased by 12.1 percent to P3.82 billion in the first half as the increase in commodity prices jacked up input costs. The cost pressures, however, were partly offset by the price adjustments made in the company’s domestic products.

As of end-March, URC had a net cash position of P6.6 billion and a net debt of only P0.37 for every P1 of equity.