URC spending P7.2 billion for expansion in 2017

MANILA, Philippines – Food manufacturing giant Universal Robina Corporation (URC) is spending a little less this year, alloting P7.2 billion for its capital spending budget mainly to expand its facilities here and abroad.

This is 7.81% lower than the P7.81 billion it spent in 2016 for the installation of new wafer and coffee mixing lines, upgrade of beverage facilities in the Philippines, and construction of warehouse and coffee manufacturing facilities in Vietnam.

URC said in a report to the Philippine Stock Exchange (PSE) that for 2017, it earmarked a total of P4.8 billion to expand capacities as well as improve handling, distribution, and operational efficiencies of its branded food businesses.

The Gokongwei-led food manufacturer said it will construct a factory building in Malaysia, a candy plant in Thailand, a biscuit line in Indonesia, bottle-making equipment in Vietnam, and a mega warehouse in the Philippines. 

Aside from these, URC said it will spend about P1.45 billion for flourmill construction, sugar business expansion, as well as maintenance capital expenditures. (READ: Universal Robina buys Snack Brands Australia for AU$600M)

A total of P950 million from its 2017 capital spending budget will be for sow level expansion, farm improvements, and handling facilities for its feeds division. 

Higher net income

URC also saw its net income attributable to equity holders of the parent jump by 22.3% to P15.14 billion in fiscal year 2016, from P12.38 billion recorded in fiscal year 2015 despite a decline in sales from international operations.

Its consolidated revenues inched up by 2.4% for the fiscal year ended September 2016 to P111.63 billion from a year ago level. (READ: Universal Robina buys NZ snack food maker Griffin’s)

Sales from URC’s branded consumer foods segment, which accounted for the bulk of total revenues, inched up to P91.37 billion last year, from P90.73 billion registered in 2015.

URC said sales were muted due to a decline in the coffee category, as a result of intense competition in the saturated coffee market, while the snackfoods category was flattish due to the aggressive low-priced players affecting corn chips and pelletized snacks.

Net sales from URC’s international operations slid by 5.1% to P31.45 billion in fiscal year 2016 due to the regulatory issues it encountered in Vietnam last year.

It was in May when Vietnam’s Ministry of Health ordered the recall of beverage products being produced by URC for “moderately exceeding” the lead content prescribed by the government. – Rappler.com