Gokongwei-led Universal Robina Corp. (URC) has bowed out of its market-leading snacks and biscuits businesses in Australia and New Zealand to focus on other opportunities in developing markets, boosting its financial position amid a prolonged COVID-19 pandemic.
The Intersnack Group, one of the leading manufacturers of savory snacks in Europe, signed a deal to acquire URC’s 60-percent remaining stake in Unisnack ANZ, which accounted for about 16 percent of URC’s total business.
“The acquisitions of Griffin’s Foods and Snack Brands Australia were URC’s biggest forays outside of Asia. Over the past seven years, we have invested in delivering significant operational improvements and value creation programs. We are pleased to be handing full stewardship of these strong businesses to our partner Intersnack, while we continue to focus on other growth segments and geographies across developing markets,” URC president Irwin Lee said in a disclosure to the Philippine Stock Exchange on Friday.
Consumer preference
This exit from the mature and competitive market in Oceana was “neutral to positive” for URC, leading online stock brokerage COL Financial said in a research note.
COL noted URC’s sales out of Oceania sales had declined by 1 percent in the first quarter of this year, coming from a high base arising from pantry loading in 2020. “Before the pandemic, sales in Australia grew by low-to-mid-single digits, while the New Zealand business recorded flattish sales in 2019, coming from an 11-percent decline in 2018,” COL said, attributing these to the competitive environment and mature snacking segment in Oceania. “Consumer preference has also shifted towards healthier snacks, affecting the salty snacks and sweet biscuits segment of Unisnack ANZ,” COL said.It noted proceeds from this divestment may be used to pay off URC’s Australian and New Zealand loans worth around P31 billion.
In December 2019, Intersnack acquired 40 percent of shares in URC Oceania and established the new joint venture Unisnack ANZ. Last year, Unisnack ANZ generated about $450 million in revenues through both its subsidiaries, Snack Brands Australia and Griffin’s Foods.
Wide portfolio
Snack Brands Australia, acquired by URC in 2016, is one of the leading salty snack manufacturers in Australia with a wide portfolio of local brands including Kettle, Thins, Cheezels, CC’s, Natural Chips, Jumpy’s and Samboy.
Griffin‘s Foods is New Zealand’s largest biscuit manufacturer with iconic brands such as Griffin’s, Huntley & Palmers and Gingernuts. It also owns Nice & Natural, Eta and Uppercuts, which compete in the nutritious snacks and salty category. It was acquired by URC in 2014.URC still has significant offshore food and beverage manufacturing businesses in Southeast Asia.
Meanwhile, URC’s board approved on Friday a P3-billion stock buyback program and a 5-percent increase in dividends. A company buys its own shares from the open market when it deems that its stock price is undervalued.
URC’s second quarter net profit amounted to P5.05 billion, 42.6-percent better year-on-year, despite flat sales revenues. This brought net profit for the first half to P8.5 billion, up 42 percent year-on-year, due to a onetime gain from the sale of idle land and benefits from the Comprehensive Recovery and Tax Incentives for Enterprises Act. URC’s net sales for the six-month period reached P68.5 billion, 2-percent better year-on-year.
“We are holding strong in weak market conditions in this crisis; but also using this crisis to prepare and reshape our business for long term sustained value creation. This gives us confidence to continue investing for growth while increasing returns to shareholders,” Lee said. INQ