UNIVERSAL Robina Corp. cut its operating income projection for its fiscal year ending September as the food and beverage firm continues to feel the pinch of higher costs of raw materials.

Data presented to investors showed that the Gokongwei-led firm had lowered its operating income guidance this year from flat to a 10-percent decline, or to P7.68 billion in its fiscal year 2010.

At the start of its fiscal year, URC expected operating income to grow by five percent.

The company said it expects “margins to decline by 300 [basis points] but will slowly recover in the coming months.”

Operating income fell 12 percent to P5.45 billion in the first nine months of its fiscal year from P6.226 billion in the same period last year.

This dragged URC’s unaudited net income for the October to June period to P4.94 billion, down 23.6 percent from the previous year’s P6.47 billion.

The company sees sales to be at the “midteens” level. At end-June, the company enjoyed an 18-percent sales growth led by the international branded consumer foods and sugar segments.

To position itself for further growth, URC intends to expand capacities in PET beverage, extruded and pelletized snacks and biscuits; aggressively enter new product segments such as packaged cakes and confectioneries; invest in advertising and promotion to build brands; and continue to rationalize and expand distribution capabilities

Full year capital expenditure will reach $100 million, mostly for the expansion of its domestic and international branded consumer food business.

URC is expanding its beverage business in Vietnam coupled with the establishment of additional snack and beverage lines in the Philippines, Thailand, Vietnam and Indonesia.

The company remains bullish on its international operations, which is expected to equal the size of its domestic business by 2014.

This year, its international business is projected to grow at a faster pace of 41 percent to as much as $450 million from the 32.9-percent growth to $319 million in 2010.

Its shares added P0.60 each to close at P41.60 on Friday.