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Gokongwei-led URC profit jumps 51% in first quarter

Universal Robina Corp. (URC), maker of Jack ‘N Jill snacks and Great Taste coffee, started the year on bright note, with its first quarter net income rising over 50% on the back of higher operating income and a drop in foreign exchange losses.

In a regulatory filing, the Gokongwei-led listed company said its net income attributable to equity holders of the parent jumped 51.3% to P3 billion in the January to March period, from P1.98 billion a year ago.

“This performance was driven by growth in operating income, lower foreign exchange losses, controlled financing costs, and was further boosted by benefits from the Comprehensive Recovery and Tax Incentives for Enterprises (CREATE) Act,” URC said, referring to the law that reduces the corporate income tax rate to 25% starting July 2020.

Consolidated sale of goods and services went up 3.5% to P34.61 billion in the first quarter, as the recovery of its international units and growth in commodity division offset the drop in branded consumer foods in the domestic market.

Sales of branded consumer foods inched up by 1.3% to P25.73 billion, despite a 5% decline in domestic operations sales to P14.92 billion. URC noted last year’s sales from domestic operations had a high base “fueled by the initial pantry stock up with the Taal eruption and the start of the pandemic shifting household spending to pantry essentials.”

On the other hand, net sales from international operations jumped 11% to P10.8 billion, mainly due to foreign exchange appreciation, particularly in Australia and New Zealand.

URC said its agro-industrial and commodities divisions saw a 10% increase in sales to P8.5 billion, thanks to the 19% growth in the commodity foods group’s sales.

Meanwhile, the company reported a P152 million net foreign exchange loss, lower than the P820 million posted a year ago. This was mainly due to the lower devaluation of the Indonesia rupiah against the US dollar and the higher devaluation of the Philippine peso against the US dollar, compared to a year ago.

URC’s finance costs fell by 24.7% to P307 million for the first quarter of 2021, while finance revenue dropped by 60% to P43 million “due to lower dividend income and lower interest rates.”

“COVID-19 is still very much with us. In general, domestic sentiment remains muted, with many consumers still very cautious on spending. On the cost side, we face headwinds as commodity prices continue rising. Despite these challenges, we were able to gain market share, increase overall top line sales, and achieve good profit growth,” Irwin C. Lee, URC president and chief executive officer, said in a statement.

Shares in URC dipped 0.07% to close at P136.90 each.

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