URC to exit China; posts slight earnings growth in H1

INQUIRER FILE PHOTO

Snack food maker Universal Robina Corp. (URC) will make its exit from the China market by next year, with the Gokongwei-led firm planning to shift its focus on other Asian markets.

URC currently operates its cereal and snacks businesses, such as Aces cereal and Jack ’n Jill potato chips, in China.

“Manufacturing and selling have ceased, with the full closure expected by 2025,” URC said in a stock exchange filing on Friday, calling it a “strategic exit” from the world’s second-largest economy.

“This will allow URC to redeploy resources to higher-growth markets across the region,” it added. URC did not stipulate its new target markets.

READ: URC, RLC deliver double-digit Q1 profit growth

The company said in its first-half financial statement that “several” entities in China ceased operations and “abandoned their business activities” in June. This resulted in a net loss of P580 million from P14 million for URC China.

Overall, URC’s core earnings in the first semester registered only a slight increase of 5 percent to P6.7 billion.

URC, the maker of V-Cut potato chips and C2 green tea, also explained that while operating income jumped by 10 percent to P9.4 billion, the overall bottom line growth was tempered by higher tax provisions.

Meanwhile, sales in the January to June period inched up by 3 percent to P80.7 billion.

Sales at the branded consumer foods segment, which excludes packaging and China, ended at P54.7 billion, up by 2 percent.

The segment’s growth locally was flat at P37.6 billion due to weaker consumer sentiment, URC said.

Meanwhile, the agroindustrial and commodities group had a 7-percent uptick in sales to P25.5 billion, driven by higher volumes.

“Against a challenged macroeconomic landscape, URC delivered volume-led growth and strong profits,” URC president and CEO Irwin Lee said in a statement. “We look forward to the continued recovery of consumer sentiment in the balance of the year.”

Last month, URC announced its foray into the meals preparation category through VegiGood!, a vegetable-infused breading mix.

URC said it was banking on the product’s overall taste and consistency to hold up against competitors in the mega-category.