URC earmarks P4 billion for capex this year

MANILA, Philippines - Universal Robina Corp. (URC), the food manufacturing arm of Gokongwei-led investment holding firm JG Summit Holdings Inc., has earmarked up to P4 billion for its capital spending this year in line with efforts to further strengthen its presence in the ASEAN region and China, and boost sales by 25 percent to $300 million.

In a briefing with reporters following the company’s annual stockholders meeting the other day, URC president and chief operating officer Lance Gokongwei said the firm is putting up a new factory and new production lines in Hanoi and building a new cookies line for Thailand to sell to the untapped northern Vietnam market.

“We will continue building BCFG (Branded Consumer Food Group) International to scale and improve operating efficiencies in the countries we operate in,” Gokongwei said.

He said half of the programmed capital budget will go to the expansion of the company’s operations overseas.

For this year, the company expects sales to improve as the May elections fuel a surge in consumer spending.

URC expects the agro-industrial group to perform better this year as feed sales volumes are seen to improve, with backyard hog and poultry raisers forecast to return to business and as selling prices have normalized from last year’s highs.

Hog prices will likewise continue to rise with demand increasing during the elections.

Gokongwei said he expects a banner year for the company’s sugar business on the back of surging local demand and record-high world sugar prices in 2010.

“We are positioned to capture this upside with recent expansions of our milling and refining capacities,” he said.

URC is involved in a wide range of food-related businesses, including the manufacture and distribution of branded consumer foods, production of hogs and day-old chicks, manufacture of animal and fish feeds, glucose and veterinary compounds, flour milling, and sugar milling and refining.

The company is a dominant player in savory snacks, candies and chocolates, and is a significant player in biscuits, with leading positions in cookies and pretzels.

URC is also the largest player in the ready-to-drink tea market, and is a respectable player in the coffee business. URC swung back to profitability in the first quarter of its fiscal year ending September 2010 with net earnings hitting P1.84 billion as against a net loss of P245.69 million in the same period a year earlier.

Consolidated sale of goods and services rose 8.3 percent during the October to December 2009 period to P14.37 billion.