Gokongwei-led Universal Robina Corp. (URC) grew its nine-month net profit by 7.1 percent year-on-year to P7.5 billion as households focused their spending on basic food and beverages at a time when the COVID-19 pandemic has dragged the economy into a recession.
For the third quarter alone, URC’s attributable net profit rose by 5.35 percent year-on-year to P1.97 billion as lower input costs and tighter spending made up for flat sales, based on the company’s regulatory filing.
Including earnings attributable to minority interest, URC’s nine-month net profit rose by 12 percent year-on-year to P8.14 billion.
Lower debt and interest expense and lower foreign exchange losses also contributed to the earnings growth in January to September.
“The current environment continues to pose severe challenges to the business. Weaker consumer sentiment and slowing retail sales in third quarter, plus sluggish macroeconomic fundamentals, are weighing on a slower path to market recovery,” URC president Irwin Lee said in a statement on Friday.
“Despite these challenges, we remain focused on operational excellence, business transformation and investing in building stronger brands and innovation to fuel growth. 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.
URC, a unit of conglomerate JG Summit Holdings, benefited from lower cost of raw and packaging materials, manufacturing costs and direct labor costs while selling and distribution costs as well as general and administrative expenses also declined in the third quarter and during the nine-month period compared to respective levels last year.
For the nine-month period, URC’s sales reached P99.8 billion, up by a modest 2 percent year-on-year. For the third quarter alone, however, sales were flat at P32.36 billion compared to P32.74 billion year-on-year.
The pandemic has deteriorated trading conditions, and resulted in market contractions in several snack food and beverage categories the company competes in, URC said. Despite these challenges, URC said it had gained significant market shares and performed ahead of the market.
Operating income in the nine-month period rose by 8 percent to P11.9 billion, which URC attributed to better cost management and favorable input prices that offset investments in brand-building and close to P300 million of COVID-19 related expenses to safeguard people and support business continuity.
By business segment, sales of domestic and international branded consumer foods reached P77.4 billion in the first nine months, of which domestic revenue accounted for P46.5 billion, up 1 percent year-on-year. URC reported growth in powdered beverages, snacks, biscuits and chocolate but this was offset by double-digit declines in candies, ready-to-drink beverages and the food service channel. URC nonetheless increased market shares in all key categories.
International revenue of P30 billion was flat, as the growth in its operations in New Zealand and Australia was offset by the negative impact of COVID-19 in several Southeast Asian markets. —DORIS DUMLAO-ABADILLA