Universal Robina Corp., the biggest snacks food maker, expects sales to grow by mid-teens this year amid intense competition and increasing cost of raw materials.
“Given the headwinds we are facing (intense competition, input cost inflation, forex impact and lower selling prices of sugar), we remain cautious and expect a mid-teens growth on sales and single digit growth…,” URC said in a recent analysts’ briefing.
URC, owned by the Gokongwei Group, expects to recover 60 percent to 70 percent of the peak sales level and generate a decent positive margin in Vietnam, after sales were severely affected by a recall order.
Vietnam’s Ministry of Health in May 2016 ordered the recall of beverage products produced by URC for “moderately” exceeding the lead content as prescribed by the government.
URC has reintroduced C2 and Rong Do in the Vietnam market after receiving clearance from the Vietnamese government, with a new packaging that highlighted the brands’ authenticity and supported by marketing activities to rebuild positive brand awareness.
URC also strengthened its engagement with communities, government and regulators.
URC in February formed a joint venture with Hong Kong’s Vitasoy Group to produce plant-based sustainable beverages the Philippines.
“Through this joint venture, URC aims to enter the plant milk market and, thus, further expand its ready-to-drink beverage portfolio in the Philippines addressing consumer trends on well-being and sustainable nutrition,” the company said.
URC reported a 4.7-percent decline in net income to P3.37 billion in the first quarter of 2017 from P3.53 billion year-on-year, as costs rose faster than revenues.
URC generated a consolidated sale of goods and services of P30.6 billion in the first quarter, up 7.6 percent on year, boosted by the sales of the branded consumer food group from domestic operations, which inched up 2.2 percent to P24.84 billion from P23.16 billion a year ago.
URC’s cost of sales consisting primarily of raw and packaging materials costs, however, increased 8.4 percent to P20.83 billion in the first three months from P19.22 billion a year ago on higher input costs.
