Vigilance and cooperation of the workforce resulted to Gokongwei food conglomerate Universal Robina Corp. (URC) to show financial results that are better than what were initially projected.
URC President and CEO Irwin Lee said the current uncertainty driven by the coronavirus disease 2019 (COVID-19) was still evolving but we are motivated by the fact that business results in the first half turned out better “than our severe lockdown forecasts.”
“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,” Lee explained.
Gearing for new waves
“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 said.
URC’s net income for the April to June 2020 quarter came in at P3.8 billion, which was 76 percent versus last year, 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 crisis, net sales reached P34 billion, up one 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.
Profit swings 13% up
Year-to-date, net income grew 13 percent in the first semester versus P6 billion a year ago, driven by an eight percent increase in operating income to P8.2 billion and lower foreign exchange losses.
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.
URC’s financial position remains strong, with P18.7 billion of cash as of 30 June and gearing ratio remaining comfortable.
Net debt also improved, amounting to P17.1 billion, reducing significantly by P11.5 billion versus a year ago due to strong operating cashflow and proceeds from the Unisnack Oceania transaction. Dividends of P6.9 billion were paid out as planned in the first semester.
Respectable sales results
First semester sales of domestic and international Branded Consumer Foods reached P50.9 billion. Domestic revenues grew two percent 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.
Operating income grew faster by 14 percent versus last year driven by a favorable price/cost mix, coupled with operating expenses control and cost savings.
International revenues declined by three percent on a constant currency basis and by nine percent in peso terms, driven by the negative impacts of COVID-19 in Indochina, while operating income declined by six percent.
However, international profits in the second quarter grew by 20 percent, tapering overall decline in the first half, due to buoyant sales in Oceania and cost control measures across all countries.
The agro-industrial and commodities businesses continue to be a relevant and consistent contributor to total URC.
Sales for the first half amounted to P16.5 billion, a 13 percent increase versus last year while operating income grew by 11 percent.