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URC budgets P9.1 billion to fund expansion of food business

Universal Robina Corp., the biggest snack food maker, has budgeted P9.14 billion in capital expenditures for 2019 mainly to finance the expansion of the branded consumer food group business.

URC said in a filing with the Philippine Stock Exchange it would earmark P7.31 billion for capacity expansions and improvement of information systems, handling, distribution, safety, quality control and operational efficiencies throughout the branded consumers foods group.

It is allotting another P1.25 billion to commodity foods group that includes flour mill and pasta manufacturing, sugar business expansion, improvement and maintenance, and P581 million for the agro-industrial group, packaging business facilities improvement and machine rehabilitation.    

URC’s net income declined 15 percent to P9.5 billion in 2018 due to lower operating profit and foreign exchange losses due to the weaker peso. 

Net sales in 2018 inched up two percent to P127.8 billion, driven by the agro-industrial and commodities divisions, the recovery in Vietnam and the consistent performance of Australia. 

Operating income, excluding hogs market valuation, declined seven percent to P13.8 billion as a result of lower sales volumes, mainly in coffee and higher selling and distribution expenses in the Philippines. Higher input costs and expenses in the farm feeds and flour business also affected the operating income. 

“We have set strategies that will pivot the business back to achieving sustainable growth. Executing our transformation programs well will be key to deliver a step change in our performance in 2019 and beyond,” URC president and chief executive Irwin Lee said during a briefing on February 28

Stronger top-line growth is expected from the company this year, with stronger commercial initiatives and a better macro environment in the home market. 

Lee said the company would hold or slightly improve margins, reinvesting cost savings and efficiencies into distribution and brand building activities.

Sales from the branded consumer business amounted to P101 billion, slightly lower from P101.8 billion in 2018.

Topics: Universal Robina Corp. , capital expenditures , Philippine Stock Exchange , Irwin Lee
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