Universal Robina Corporation (URC) earned 8.1 Billion Pesos for the nine months ending September 30, 2020. That is an increase of 12% from the same period last year. URC was able to reduce the input costs of its product by around 1 Billion Pesos. The cost savings translated to a higher net income for URC as sales remained at par with the previous year.
Cash generated from URC’s operations totaled 14.8 Billion Pesos, 2.3 Billion Pesos more than the same period last year. The massive cash from operations allowed URC to expand its plants and equipment spending 5.2 Billion Pesos. The cash URC has amassed during the period allowed it to take advantage of opportunities. URC bought Roxas Holdings’ sugar mill, ethanol plant and other investment properties in La Carlota City, Negros Occidental for 4.3 Billion Pesos.
Using its own cash, URC paid 2 Billion of debts and distributed dividends during the year of 7.3 Billion Pesos.
After all those expenditures, URC still ended with a cash balance of 15.9 Billion Pesos. URC’s financial position remains healthy with strong cash levels. It has a current ratio of only
1.18:1 as of September 30, 2020 and improvement to December 31, 2019’s 1.86:1. Financial debt to equity ratio of 0.78:1 as of September 30, 2020 is within comfortable level.
URC 9M20 end balance sheet showed that 16.8 Billion Pesos of loan is due in September 2021. That loan was used to acquire Australia’s second largest salty snacks maker Snack Brands Australia. Once that loan is repaid it will give URC again capacity to grow via acquisitions. If URC did a deal this year, it is expected once URC will have the financial space again to do deals it will do deals to continue its growth cycle.
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Disclaimer and Disclosure: This is an independent analysis for discussion purposes with the aim of giving stock traders and investors an independent viewpoint. Accuretti Systems Inc. in day to day trading may have owned, or is considering buying or disposing, the shares of the companies mentioned in this commentary.