February 12, 2014

URC 1QFY14 net income at P2.89b, up 26% YoY

Universal Robina Corporation (URC, BUY) sustained its strong earnings growth as it posted 1QFY14 net income of P2.89b, +26% YoY. Net sales grew 13% while EBIT soared 42% to P3.34b on the back of a significant jump in margins. 1QFY14 EBIT margins stood at 14.7%, +300bps YoY and +190bps QoQ.

Our Take: The 1QFY14 net earnings accounted for 26.5% of our full-year earnings forecast. URC’s results surprised on the upside owing to a significant jump in margins. Margin expansion was brought about by increased scale and operational efficiency coupled with the continued weakness in commodity prices.

The primary driver for growth continues to be its domestic consumer foods group which managed to increase net sales and EBIT 28% and 65% respectively. We expect the strong growth momentum to continue for the rest of the year owing to the strong domestic consumption of the Philippine economy.– WealthSec