Gokongwei-led food and drinks giant Universal Robina Corp. announced plans for a “strategic exit” from China amid a slowdown in the world’s second-largest economy.
URC, which makes cereals and other snacks in its Chinese factories, expects to fully wind down operations by 2025. The company has factories in Jiangsu and Guangdong, based on its recent financial filings.
“This will allow URC to redeploy resources to higher-growth markets across the region,” the company said in a stock exchange filing on Friday.
Other global firms have also reported sluggish consumption in China, which is being amplified by geopolitical concerns.
First half performance
The maker of Vcut potato chips and C2 iced tea reported sales of P80.7 billion for the first half of 2024, up 3 percent from last year.
Operating income rose by 10 percent to P9.4 billion, while net income from continuing operations increased by 8 percent to P7.6 billion.
Branded foods
Its main branded consumer foods group, excluding packaging and China, reached P54.7 billion in the first half of the year, a 2 percent increase from the same period last year.
Outside of China, URC has operations in Myanmar, Vietnam, Thailand, Malaysia, and Indonesia.
Meanwhile, branded foods in the Philippines grew 1 percent to P37.6 billion despite a strong 2023 and weaker consumer sentiment.
Management’s view
“Against a challenged macroeconomic landscape, URC delivered volume-led growth and strong profits,” said Irwin Lee, URC president and CEO.
“The strength of our wide portfolio allows us to continue delighting our consumers with good food and beverage choices, while also enabling us to reward shareholders with steadily increasing dividends. We look forward to the continued recovery of consumer sentiment in the balance of the year,” he added.
Dividends
URC announced its second dividend for the year, declaring a P1.90 per share dividend to stockholders as of Aug. 30, 2024, with payout expected on Sept. 25, 2024. This marks a 5 percent annual increase in dividends per share over the past four years.
