Quezon—(PHStocks)—Universal Robina Corp. (PSE: URC) posted a net sales growth of 5.2% for the first six months of fiscal year 2016 (beginning October 2015 and ending September 2016) amounting to PhP58.538 billion mainly driven by its core Branded Consumer Foods, Griffin’s and Renewables. Sales of Branded Consumer Foods (BCF) Philippines including Packaging were up by 2.7% while the International business grew faster with a 7.7% growth. Sales of Non-Branded Consumer Foods Group, comprised of Agro-Industrial Group and Commodity Foods Group grew by 9.2% driven by Sugar and Renewables (SURE) which increased by 30.8%.
Operating Income of URC was up by 6.1% amounting to PhP9.393 billion vs. last year’s PhP8.851 billion. Margin was also maintained at 16.0% which is 14 basis points higher than 15.9% last year. This was attributable to lower input prices on the branded foods business.
URC’s net income grew by 29.2% amounting to PhP8.385 billion driven by unrealized forex gains and market valuation of financial assets from the gain of Griffin’s debt currency forward hedge. URC remains in a net debt position of PhP13.537 billion with a financial gearing ratio of 0.33. The company spent PhP4.731 billion on capital expenditures mostly to increase capacities for BCF and to acquire the Balayan Sugar Mill for Sugar. URC also paid PhP6.987 billion for the dividend payout last March 28, 2016, and PhP10.108 billion for the offshore long-term debt repayment last February 16, 2016.
SALES PERFORMANCE PER BUSINESS
Branded Consumer Foods (BCF) Group
Sales of BCF grew by 4.4%, resulting to PhP48.456 billion in the first six months of fiscal year 2016 vs. PhP46.408 billion last year.
BCF Philippines, excluding Packaging division registered a muted sales growth of 2.6%, amounting to PhP30.410 billion as the business had tougher comparables specifically on the coffee category pushing the growth last year. For this period, there was a significant change in the product mix driven mainly by beverage. From selling mostly single-serve packs of Great Taste White last year, half of BCF Philippines coffee mixes volumes shifted to twin packs. The company also sold more cases of lower value per case RTD beverage and as such pulling down the average sales per unit. On the other hand, BCF Philippines’ Traditional Retail was greatly affected by El Niño which continues to linger in the country especially in Visayas and Mindanao. Despite these, the Company still managed to grow in most of its categories with C2, Chocolates and Noodles growing double-digits, and Candies and Bakery growing low single-digits. Blue, the product of URC’s joint venture with Danone also grew stronger with higher average sales per month vs. last year.
BCF International sales posted PhP17.454 billion, a growth of 7.7% vs. last year’s net sales of PhP16.210 billion driven by Indonesia, Vietnam, Malaysia and New Zealand. In terms of local currency, Thailand was flat as a result of the slowdown in the Biscuits category and still weak macroeconomic situation affecting consumer sentiment. Indonesia grew by 25.1% driven by Piattos, Chocolates, Chiz King and Dewberry. Vietnam increased by 9.1% on the back of strong sales from C2 and Rong Do which are both continuously gaining shares in the market. Malaysia was also up by 9.7% as Cloud 9 performed positively with Cloud 9 Party Packs and Multipacks. Singapore grew by 11.9% driven by snacks and biscuits. Our Griffin’s business in New Zealand continues to post good market shares and we have been actively taking steps to grow its value faster than volume and improve its profitability.
Non-Branded Consumer Foods Group
Sales of the Non-Branded Consumer Foods Group registered at PhP10.082 billion for the first six months of fiscal year 2016 vs. PhP9.237 billion last year, a 9.2% growth with Renewables and Feeds as main contributors.
Commodity Foods Group was up by 17.4%. Sugar and Renewables (SURE) sales grew by 30.8% driven by incremental revenues from Distillery and Cogen which started their operations in the second and fourth quarter last year, respectively. Flour sales were flat as a result of lower average selling prices offsetting the increase in sales volumes of pasta and flour.
Agro-Industrial Group’s sales were also flat due to mixed results from its segments. Farms was down by 17.1% due to the decrease in both sales volume and average selling price of hogs and the operating costs related to our slaughterhouse. This was pushed up by the 22.8% sales growth of Feeds driven by strong sales of hog feeds.