Branded segment lifted URC Q2 core earnings

Universal Robina Corp. (URC) posted a 10-percent increase in second-quarter core net income attributable to parent to P2.9 billion.

This, as growth in its branded food and animal nutrition businesses offset weakness in its sugar operations and higher costs linked to the Middle East crisis.

In a disclosure on Thursday, the Gokongwei-led food manufacturer said second-quarter sales rose 2 percent to P41.5 billion. This brought first-half revenue growth to 4 percent.

“While geopolitical tensions and inflationary pressures remain risks going forward, our strong brands, distribution and customer partnerships strength and disciplined operational execution provide us with the flexibility to adapt and sustain competitive advantage in a volatile environment,” said Irwin Lee, URC president and CEO.

Branded consumer goods

The increase was driven mainly by its branded consumer foods (BCF) and animal nutrition and health (ANH) businesses, alongside continued expansion of its flour operations.

Operating income likewise grew 2 percent despite higher oil-related costs stemming from the Middle East conflict and the expected softness in the sugar business due to lower volumes and weaker market prices.

URC said earnings were supported by the solid performance of BCF Philippines, the positive contribution of BCF International in peso terms and stronger profits from its flour business as the Sariaya facility continued to ramp up production.

Continuing operations

Meanwhile, net income from continuing operations climbed 25 percent year on year to P3 billion.

The company’s BCF segment generated P29.4 billion in quarterly sales, up 4 percent from a year earlier.

Domestic sales rose 3 percent to P20.1 billion, led by bakery products and powdered beverages, the latter benefiting from pricing actions implemented last year and lower input costs.

Overseas revenue

International sales increased 8 percent in peso terms, although they slipped 2 percent in constant currency as stronger demand in Vietnam and Malaysia was offset by softer sales in Thailand and disruptions in Cambodia following the Thai-Cambodia border conflict.

Its agro-industrial and commodities business posted P12.1 billion in sales, down 3 percent, as weaker sugar volumes and lower prices outweighted gains in ANH and flour.

Flour sales expanded 8 percent while ANH grew 20 percent.

Commodities earnings still increased 7 percent, supported by a high double-digit profit increase from the flour business.