URC lowers outlook on ‘tougher market’

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Lingering El Niño impact, competitive environment reduces revenue expectations
Universal Robina Corp., (URC), the food unit of the Gokongwei family, has narrowed its revenue outlook for the year on tough market conditions.

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URC revised its topline growth outlook to 6 to 7 percent from the original 8 to 9 percent.

Despite the adjustment, operating income is still seen to grow by 10 percent.

Company officials in a briefing to analysts explained that the company would continue to reel from the lingering effects of El Niño for the next 12 months.

The company also expects a “tougher competitive environment across the market.”

For the rest of the year, URC said it will continue to strengthen its portfolio “with exciting new products, price points, and value for money offerings” while expanding distribution and availability of its brands.

URC said it would further scale up its affordable premium products through its joint ventures and aggressively introduce the Griffin’s snack brand in the market.

URC acquired New Zealand-based Griffin’s in mid-2014.

URC reported that its net profit for the first six months of its fiscal year ending September hit P8.39 billion, up 29.2 percent from the prior year’s P6.49 billion.

Net sales stood at P58.54 billion, 5.2 percent higher than last year’s P55.64 billion, mainly driven by its core branded consumer foods, Griffin’s, and renewables.

URC said the profit growth was driven by unrealized forex gains and market valuation of financial assets from the gain of Griffin’s debt currency forward hedge.

The company sees its foreign exchange stabilizing through the rest of the year.

In addition, it posted a net sales growth of 5.2 percent for the first six months of fiscal year 2016 to P58.54 billion, mainly driven by its core branded consumer foods, Griffin’s and renewables.

Sales of branded consumer foods in the Philippines including packaging were up by 2.7 percent, while the international business grew faster at 7.7 percent.

On the other hand, sales of the non-branded consumer foods group, comprising the agro-industrial and commodity foods groups grew by 9.2 percent, driven by sugar and renewables, which increased by 30.8 percent.

Operating income of URC was up by 6.1 percent amounting to P9.39 billion from last year’s P8.85 billion. Margin was at 16 percent, 14 basis points higher than 15.9 percent last year, due to lower input prices on the branded foods business.

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