Sales volume propels URC Q1 net income growth amidst margin squeeze

Inflation took a bite at URC’s profit margin. URC’s gross profit margin decreased by 274 basis points from 30.1% in 2021 Q1 to 27.3% in 2022 Q1.

But despite the gross profit margin squeeze, URC is still able to grow its net income from continuing operations from 2.994 billion in 2021 Q1 to 3.578 billion in 2022 Q1. The growth in net income can be attributed to the impressive improvement in sales volume.

For the period 2022 Q1, URC generated sales of 35.783 billion, which is 21.9% higher than the same period last year. Both Branded Consumer Food and Agro-Industrial and Commodities registered substantial double-digit volumes growth.

This phenomenon only shows that URC is not passing the entire increase in costs to consumers. As a result, URC products are better priced than the competition. In turn, URC is eating up market share from the competition.

The increase in market share could provide a profit windfall to URC once the sales costs taper off.

Sentiments have dragged down URC’s shares price, which probably makes URC an asymmetrical bet.

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