Universal Robina Corporation (PSE: URC)

Universal Robina Corporation (URC, the Company) is engaged in three business segment:

  1. Branded consumer foods
  2. Agro-industrial products
  3. Commodity food products

The following is the revenue mix for each segment:

URC1

The Company’s agro-industrial products segment operates three divisions which engage in hog and poultry farming, the manufacture and distribution of animal feeds, glucose and soya products, and the production and distribution of animal health products. Commodity food products segment engages in sugar milling and refining, flour milling and pasta manufacturing.

URC’s largest contributor Branded consumer foods group (BCFG) sells its products to China, Vietnam, and Indonesia. Vietnam is the biggest contributor with 42.7% of URC international sales as of March 2013 in dollar terms due to the continued growth of C2 ready-to-drink (RTD) sales and energy drink Rong Do.

Locally, URC is the market leader in RTD tea (C2), second in noodles, and third is the coffee business. BCFG sales grew by 14.6% as of March 2013 mainly driven by the strong performance of its beverage division which grew 76.5%. The growth of the beverage division was due to the coffee business and strong start of RTD tea with its introduction of 230-ml line. [1]

It is interesting to note that URC’s management had made a good decision to sell all their debt securities and significant portion of their equity securities to settle their long-term debts resulting to a substantially low debt-to-equity ratio and lower finance costs for the next six months.

URC2

Comments:

With the absence of one-time gains in 2012, URC is bound to present earnings disappointment. Below is my projection:

URC3

I expect URC’s earnings not to exceed P 6.5 billion for 2013 a disappointing figure from 2012 earnings of P 8 billion.

Source:

  1. URC Sec 17Q March 2013 filings, Results of operations, p. 5, http://www.pse.com.ph/resource/corpt/2013/URC_17Q_Mar2013.pdf

Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell. Read more in the ABOUT page.

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