Universal Robina seen posting modest growth

UNIVERSAL Robina Corp. (URC) is expected to deliver a slight increase in earnings this year amid weak consumer sentiment that continues to dampen domestic business, Maybank Investment Banking Group said.

The Gokongwei-led food and beverage company is forecast to post a 7.6-percent growth in net income and a 13.7-percent rise in earnings before interest and taxes (EBIT), Maybank said in a recent report.

URC’s preliminary guidance is that of mid-to-high single-digit blended volume-driven revenue growth. The gains are expected to be used for promotional expenses and logistics costs.

The expected increase in earnings is “achievable given forecast topline growth of 5 percent year on year,” Maybank said.

URC saw its net income drop by 13 percent to P12.2 billion last year, from P14.5 billion in 2022, despite a 6-percent growth in revenues to P158.4 billion from P149.9 billion a year earlier.

“Consumers continue to grapple with a smaller household budget and are switching to larger pack sizes and multicategory bundling to save money,” Maybank said.

URC’s EBIT margin is also expected to slightly improve to 11.8 percent and 12.6 percent for this year and the next, respectively.

“[W]e expect URC to maintain market leadership for snacks, candies, chocolates, cup noodles and RTD (ready-to-drink) tea,” Maybank noted, adding that cash flows could support up to P11.7 billion for capital expenditures in 2024 and 2025.

Given that the majority of domestic operations use imported materials, a sharp peso fall could hamper growth, the bank added.

Price wars in the coffee and noodles segments as well as geopolitical tensions were also seen as potential risks.

URC shares dropped by 1.45 percent to P105.30 apiece on Wednesday. Philippine financial markets are currently on a break in observance of Holy Week.