URC president and chief operating officer Lance Gokongwei said of the total budget, P2 billion to P2.2 billion will be spent this year while the balance of P1.2 billion to P1.5 billion will be used next year to finance new investments.
Gokongwei said bulk of the capital outlay will be used for the continued expansion of its branded consumer food business in the Philippines and in Asia, in its bid to become a regional powerhouse in the snacks, candies, wafer, biscuit and chocolate markets.
Gokongwei said the company will start construction of a new plant in Vietnam by the end of the year to further boost profitability. The plant would manufacture either snacks, candy, chocolate or biscuits. URC also plans to set up a chocolate plant in Indonesia.
The company has also set aside P900 million for the expansion of its Manila flour milling facility. Set for completion in July or August this year, the project will double the capacity of the existing manufacturing flour mill to 550 tons per day, and will make URC the country’s biggest flour miller.
The balance will be spent for the construction of a new flour mill in Pasig, acquisition of additional manufacturing equipment to increase plant capacity, and expansion of warehouse and distribution capacity.
Funding for its expansion will come from the proceeds of its $125-million bond float in the international market.
Gokongwei said $30 to 40 million of the proceeds from the bond issue will also be used to fund acquisitions, either overseas or in the domestic market and pay off short-term maturities.
URC reported a 34.4 percent increase in its net income for the first half of its fiscal year ending September 2003 to P966.04 million. Consolidated net sales and services amounted to P11.6 billion, reflecting a 12.8 percent growth over the same period last year.
The branded consumer foods business unit posted sales and services value growth of 15.4 percent to P8.97 billion compared to the same period last year. This was driven by URC’s regional snack food revenue growth of 44 percent and the continued strength of the company’s products in core categories such as snacks, candy, chocolate and biscuit segments complemented by strong exports.
Aside from exports to over 25 countries such as Taiwan, the US, Italy, Japan and the Middle East, URC has existing manufacturing units of snacks and candies in Thailand, Malaysia and China as well as distribution facilities in Hongkong and Singapore.
URC is also the biggest producer of bi-axially oriented polypropylene (BOPP) films used for packaging, printing and laminating application, tape film for adhesive tape application, and heat sealable film for flexo and gravure printing and laminating application. It has a 46-percent share of the domestic market.
URC, one of the largest food companies in the Philippines, contributes around 40 percent to JG Summit Group’s revenues and 25 percent to bottomline earnings. The company manufactures and derives the bulk of its revenues on a wide range of branded consumer foods (Jack & Jill snacks, Great Taste coffee mixes, Cloud 9 and Nips chocolates, XO and Maxx candies, Payless and Nissin noodles, and Hunt’s canned products and sauces, among others).