URC income grew 11.8% as of end-June to P9.65B

Gokongwei-led regional food giant Universal Robina Corp. posted an 11.8-percent growth in net profit in the nine-month period ending June this year to P9.65 billion, driven by the double-digit rise in sales from domestic and international branded businesses.

URC expanded sales by 18.3 percent year-on-year in the first nine months of its fiscal year – which begins in October and ends September the following year—to reach P81.94 billion.

The strong sales growth was mainly driven by branded foods and complemented by sugar and feeds.

Philippine branded consumer foods business increased sales by 10.9 percent year-on-year while the international segment also grew by 38.4 percent year-on-year with the consolidation of Griffin’s starting mid-November upon closing of the acquisition.

Sales of nonbranded consumer foods group increased by 12.5 percent year-on-year for the first nine months due to the increase in sales volume for sugar and feeds, which grew by 39.4 percent and 19.9 percent, respectively.

URC’s operating income was at P13.059 billion for the first nine months of the fiscal year, up by 24.1 percent as lower input prices— such as for palm oil, creamer and polyethylene terephthalate resin—and additional operating leverage resulted in margin expansion for branded foods.

But growth in net profit was slower than operating income as URC booked higher net finance cost alongside equity share in net losses of joint ventures started recently: Calbee-URC, Inc. and Danone Universal Robina Beverages Inc. There were likewise unrealized foreign exchange losses mainly coming from its Indonesia operations.

From the Philippine branded consumer food business, the group recorded P43.14 billion in net sales. Beverages remained the main driver, backed by the continued growth of powdered beverage business – mainly coming from coffee – that was 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 our grocery division posted strong double-digit growth,” the company reported.

URC’s international branded consumer food business registered sales of P24.84 billion, with Thailand, Vietnam and Indonesia contributing to the strong top-line growth.

“We have also started consolidating Griffin’s into URC International starting mid-November upon closing of the acquisition,” the company said, referring to the landmark acquisition of New Zealand’s leading biscuit-maker. Griffins posted a 6-percent growth for its current calendar year (starting January) coming from both the domestic New Zealand and Australia exports markets.

Sales out of Thailand posted a double-digit growth of 11.7 percent despite a relatively weak macro environment and consumer sentiment backed by core brands, new products launches and continuation of promotional activities.

Indonesia sales were up 28.6 percent year-on-year, attributed to successful new product launches for chocolates and snacks.

Vietnam showed signs of recovery, posting a growth of 7.6 percent with ready-to-drink beverage category now up versus last year driven by C2 and the robust sales of energy drink brand, Rong Do.

URC remains the market leader in Thailand’s biscuits and wafers segments and is likewise the number one player in Vietnam’s ready-to-drink tea segment.

Meanwhile, non-branded consumer foods business, commodity foods group and agro-industrial group, posted revenues of P13.116 billion for the first nine months of fiscal year 2015, an increase of 12.5 percent against last year. This was attributed to the 17.7-percent increase in revenues for commodity foods.

The sugar business grew revenues by 39.4 percent due to higher volumes, while growth in flour business was flat versus the same period last year.

Net sales for the agro-industrial group increased by 7.9 percent due to good sales volume for feeds, which grew by 19.9 percent, while the farms business posted flattish growth.