Strong cash flow is URC’s ammunition for growth, acquires Munchy

As can be seen from its financials in 2020, it is just a matter of time that URC strikes an acquisition.  Indeed URC signs a deal to acquire Munchy, Malaysia’s No. 1 biscuit maker, from CVC.  CVC is a global private equity giant in the league of KKR and Warburg Pincus.

In 2020, URC bought Roxas Holdings’ sugar mill, ethanol plant, and other investment properties in La Carlota, Negros Occidental, for 4.3 Billion.  That acquisition proved to be timely as inflation and prices of commodities rose.

As of the end of the third quarter of 2021, URC spent 11 Billion on property, plant, and equipment and 3 Billion more on inventories to grow organically.

Not contented with organic growth, URC strikes a deal to acquire Munchy, Malaysia’s No. 1 biscuit maker.

URC generates strong cash flow from operations. In the nine months of 2021, URC generated cash from operations of 9.4 Billion. For the whole of 2021, URC can generate around 16 Billion of money from operations.  This massive cash flow, if levered, can make URC an acquisition machine.

The Munchy acquisition will be net income and cash flow accretive to URC.  Munchy is in itself is a cash flow from operations positive.  Incremental cash flow from operations will be generated from synergies with URC.

URC is on a path to sustainable growth.

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