URC attributable net income down in 3rd quarter

UNIVERSAL ROBINA Corp. (URC) reported a 39% drop in attributable profit for the third quarter of 2017, as the firm saw lower volumes and higher net finance costs in addition foreign exchange gains.

In a regulatory filing, the Gokongwei-led firm said it posted a net income attributable to the parent of P1.96 billion in the three months ended September 2017, lower than the P3.2 billion it generated in the same period in 2016.

The decline comes amid a 20% increase in the sale of goods and services to P31.62 billion during the period, primarily due to its core snacking business and joint ventures in Branded Consumer Foods ( BCF) Philippines, BCF Thailand, Farms, and Snack Brands Australia (SBA). The company also noted a 16% increase in the non-branded consumer foods group.

“Profitability remained weak as the company faced a decline in volumes and a change in mix particularly on the coffee category of BCF Philippines, a slower than expected recovery in Vietnam, and an overall unfavorable forex and input cost inflation,” URC said.

This pulled the company’s nine- month attributable profit 21% lower to P8.21 billion. Revenues, meanwhile, still posted a 13% growth to P92.42 billion.

URC is a subsidiary of the Gokongwei group’s holding firm JG Summit Holdings, Inc. with interests in the food business through three segments, namely branded consumer foods, agro-industrial products, and commodity food products.

International operations of the BCF group offset the flat performance in the domestic market at P44.3 billion, from P43.69 billion in the same period a year ago. BCF overseas booked a 38.9% increase to P31.23 billion, pushed by double-digit growth in the United States and Thailand, and the consolidation of sales from SBA in Malaysia, which URC acquired back in October 2016.

Sales from URC’s packaging division was up by 20.5% to P992 million for the period, on the back of higher prices and volume.

Meanwhile, sales of the company’s agro- industrial segment saw an 8.9% uptick to P7.44 billion amid a positive performance in its feeds, and farms businesses.

Sales from the commodity foods segment on the other hand increased by 24.2% to P9.07 billion, fueled by the performance of its sugar business, which saw higher sales volume, coupled with the 18.2% climb of its renewable business. URC’s flour business was affected by softer market conditions, declining by 6.2% during the period.

URC further attributed the decline in earnings to unrealized net foreign exchange gains, which was down by 55.7% during the nine-month period to P768 million.

“(This is) due to the combined effects of depreciation of international subsidiaries’ local currencies and Philippine peso vis-a-vis US dollar,” the company said.

URC ended the first nine months of the year in a net debt position of P28.21 billion, coming from its long-term debt in Australia and New Zealand.

Shares in URC dropped P6 or 4.12% to P139.50 each at the stock exchange on Tuesday.