URC braces for weaker demand as Middle East conflict spikes inflation

Universal Robina Corp. on Thursday said it is bracing for potential pressure on consumer demand due to inflation risks brought about by the Middle East conflict, following the decline in its first-quarter net income due to lower sugar selling prices.

The Gokongwei-led food and beverage maker said its attributable core net income fell by 2% to P3.8 billion, as total operating income declined by 2% to P5.4 billion. Net income from continuing operations dropped by 4% to P4.1 billion.

“We are balancing targeted demand support with margin recovery. We remain mindful that any inflationary spillover from the Middle East conflict could pressure consumer demand, and we will stay agile – managing pricing, mix, and costs carefully to sustain momentum,” URC president and chief executive officer Irwin Lee said in an emailed statement.

Inflation clocked in at 7.2% in April, faster than the 4.1% in March, and the 1.4% a year ago. This is the fastest since March 2023’s 7.6%, and above the central bank’s 5.6% to 6.4% estimate for the month.

URC reported a 6% growth in its sales for the quarter, with branded consumer foods (BCF) delivering P32.2 billion to reflect a 9% increase from the previous year. Philippine sales grew by 10% to P22 billion, while international sales rose by 6% to P10.2 billion.

Agro-industrial and commodities (AIC) posted P15.7 billion in sales, with animal nutrition and health up by 22% year-on-year, and flour up by 17%. This was offset by the drop in sugar and renewables due to lower distillery utilization rates.

“We started the year with strong, volume-led growth, led by BCF Philippines, reflecting accelerating momentum and continued excellence in execution,” Lee said.

Shares in URC were last traded at P62.00 apiece, up by 50 centavos or 0.81% from Wednesday’s finish of P61.50 per share. — JMA, GMA News