Universal Robina Corp., the largest snack food maker, said net income fell by more than a fifth in the first half of the year on weak domestic sales, especially lower coffee volumes.
URC said in a disclosure to the stock exchange first-half net income amounted to P4.9 billion, down 23 percent year-on-year, driven by lower operating income and lower foreign exchange gains.
“We are pleased with our overall sales growth momentum and are working hard to address the short-term challenges to profitability brought about by peso devaluation and inflationary pressures. Together with the URC leadership team, we have identified key priority areas that can help us deliver sustainable growth for years to come,” URC president and chief executive Irwin Lee said.
“These include developing a people and planet friendly culture that will, in turn, enable product supply chain transformations, preferred partnerships with customers and suppliers, and a portfolio of innovations to deliver products and brands that consumers love,” he added.
Lee plans in the short to medium term to address challenges in competing in a more intense domestic market and evaluating structural improvements to the business, which includes sales distribution and supply chain capabilities.
The company’s net sales in the first half amounted to P64.4 billion, a 6-percent increase versus last year, driven by strong growth in the international and agro-industrial and commodities divisions.
Sales growth accelerated from 2 percent in the first quarter to 10 percent in the second quarter.
URC’s operating income in the first half stood at P6.8 billion, down 11 percent due to lower coffee volumes and higher selling and distribution expenses.
Sales of domestic and international branded consumer food and beverage products reached P50.4 billion in the first half, up 2 percent on the year.
The domestic revenues comprised P29.5 billion and declined 2 percent, although sales trends improved from a 5-percent drop in the first quarter to a 1 percent growth in the second quarter.
URC saw good domestic sales growth in all of its food businesses in the first half—Jack n’ Jill snacks, baked biscuits and cakes, candies, chocolates, Nissin noodles—and in its ready-to-drink beverages like C2 tea and Refresh water.
“The main drag to its domestic performance remains to be coffee,” URC said.