URC net earnings tumble 17% due to inflation, weak peso

Universal Robina Corporation (URC) the food and beverage unit of the Gokongwei group, reported a 17 percent drop in net income to 17 billion in the first nine months of the year due to lower operating income and foreign exchange loss amid a weaker peso.

In a disclosure to the Philippine Stock Exchange, the firm said it posted net sales of 195.5 billion for the first nine-months of calendar year 2018, a 3 percent increase versus last year.

However, sales growth in the third quarter ending September decelerated to 1 percent from the 6 percent posted in the first half.

“Recovery in Branded Consumer Foods (BCF) Philippines and Vietnam growth were partly offset by weaker New Zealand trading and the shift in timing on sugar sales,” URC said.

Operating income showed good improvement in third quarter posting 5 percent growth driven by the impact of selling price increases in BCF Philippines, continuous recovery in Vietnam, and effective cost management.

This helped improve nine months operating income to 110.1 billion, a tapering decline of 6 percent versus last year compared to the 11 percent decline in the first half.

“The environment remains to be very challenging with macro-economic pressures especially in the Philippines,” said URC President Irwin Lee.

He noted that, “the weaker peso and inflation continue to affect our conversion and operating costs thus margins are continuously affected. We will be proactive and look for opportunities to manage our portfolio better and implement plans and programs to mitigate the effects to our topline and bottomline in the near term.”

URC said sales of domestic and international branded consumer food reached 125.8 billion in the third quarter, which is flat versus last year. This resulted in a 2 percent growth in the first nine months versus last year, amounting to 176.2 billion.

Domestic revenues for the nine months showed a decline of 1 percent amounting to 143.4 billion while, internationally, there was a 5 percent growth to 132.7 billion.

Agro-Industrial & Commodities continue to be a relevant contributor to total URC. Sales amounted to 118.2 billion, a 10 percent increase versus last year, driven by higher volumes in Flour and Feeds as well as higher selling prices of Hogs.