URC posts higher profit due to forex gains

Published August 2, 2020, 10:00 PM

by James A. Loyola

Universal Robina Corporation (URC) reported a 13 percent growth in net income for the first semester of 2020 to P6 billion, driven by an 8 percent increase in operating income to P8.2 billion and lower foreign exchange losses.

In a disclosure to the Philippine Stock Exchange, the firm said net sales continued to hold up at P67.4 billion, with better than expected delivery coming from the divisions of Branded Consumer Foods Philippines; Agro-Industrial & Commodities; and the Unisnack Oceania and Nissin-URC joint ventures.   

Net income for the second quarter alone surged 76 percent to P3.8 billion on the back of strong operating performance and foreign exchange gains.

Operating income of P4.3 billion was up 16 percent versus last year, driven by positive category mix and disciplined cost control amid the pandemic.

Despite the prevailing COVID-19 situation, net sales reached P34 billion, up 1 percent versus last year, as strong growth in Snackfoods, Noodles, Powdered Drinks, Animal Feeds, Flour and Sugar offset out-of-home consumption declines in Candies and Ready-To-Drink (RTD) Beverages.

“The current uncertainty driven by COVID-19 is still evolving but we are motivated by the fact that business results in the first half turned out better than our severe lockdown forecasts,” said URC President and CEO Irwin Lee.

He noted that, “While we have business continuity plans quickly set in motion, we were bracing for the worst due to quarantine restrictions, supply chain disruptions and fast demand shifts.  Fortunately, our focus on execution and the heroic efforts of URC people and partners helped us deliver essential food and drinks to customers, consumers, communities and frontliners.”

“Managing through this crisis requires continued vigilance, agility and flexibility.  While we may have weathered the first wave of this crisis, we must continue securing the here and now, while also preparing for the recovery efforts for the balance of the year and beyond,” Lee added.

URC said first semester sales of domestic and international Branded Consumer Foods reached P50.9 billion.

Domestic revenues grew 2percent as sales were driven by strong growth in Snacks, Bakery, Coffee, Powdered Chocolate and Noodles versus out-of-home consumption declines in Confectionery, RTD Beverages and Food Services.

International revenues declined by 3 percent on a constant currency basis and by 9 percent in peso terms, driven by the negative impacts of COVID-19 in Indochina.

However, International profits in grew by 20 percent in the second quarter, tapering overall decline in the first half, due to buoyant sales in Oceania and cost control measures across all countries.

URC’s Agro-Industrial & Commodities businesses reported a 13 percent growth in sales for the first half to P16.5 billion. 

The Commodities Foods Group revenue grew strongly by 26percent, with Sugar and Renewables (SURE) growing 31 percent and Flour growing 12 percent.

These were offset by Agro-Industrial Group’s sales decline of 3 percent, due to the previously announced downsizing and lower volumes in hogs.