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Message from the
President & CEO
“URC remained steadfast in its people-first commitment in 2020. We pushed beyond boundaries for the well-being of our employees, consumers, and the communities we serve.”
Message from the
President & CEO
To our valued Shareholders,
The past year has been challenging to say the least. Each one of us has been affected by the pandemic, whether in our professional or personal lives. As a company with a familial culture, we deeply empathize with those afflicted by the pandemic.
Despite the circumstances, URC remained steadfast in its people-first commitment in 2020. We pushed beyond boundaries for the well-being of our employees, consumers, and the communities we serve. We were determined to deliver delight at a time when people needed it the most.
I write this year’s annual report letter with immense gratitude for having withstood these trials, and now, a greater sense of optimism for the journey ahead.
We are pleased to share that this collective effort was rewarded kindly with profit growth despite the challenging market landscape. In this report, we chart the fruitful outcomes of the year, illustrated not only in facts and figures but through stories of success.
Humble Triumphs
URC’s robust 4-fold strategy framework, established prior to 2020, served us well to counter the effects of the pandemic:
Implementing these How-To-Win strategies led to strides of growth within 2020. We will detail these in the Strategy Updates section of the report.
URC was able to stay ahead of the curve amid the global economic slowdown by focusing on these key priorities. They enabled us to launch products with purpose, catering to new consumer trends of health, value for money, in-home consumption, and affordable indulgence.
We took this a step further by reinforcing product supply and availability in the market, ramping up production and logistics capabilities. We attribute our reliability and success to our resilient supply chain team and sales force, who see to it that supermarket and grocery shelves are always stocked with our goods.
Introducing alternative selling channels, such as online retailers, caravans, and community marts, was essential in fostering safe and secure environments for our essential workers, employees, and loyal customers. This action plan opened up future expansion opportunities while addressing shifts in the present retail landscape.
Each conscious decision was rooted in our robust organizational strategy, which you will also learn more about in this report.
Business Review
“We achieved a 15% increase in Net Income with Php 11.6 billion, which is linked to our continued growth in operating results.”
In 2020, URC’s financial performance proved to be stable amid the challenging market landscape. Our Net Sales amounted to Php 133.1 billion, declining 1% versus 2019. This decline was due to challenged consumer sentiment as well as a shift in consumer behavior due to the pandemic. The move from out-of-home to in-home consumption affected major categories within Branded Consumer Foods.
Despite these challenges, we were able to streamline our operating expenses and manage our cost of sales effectively, allowing us to maintain our progress in Operating Income from 2019. This year, URC is up by 7% amounting to Php 16.0 billion, with margins improving by +86 basis points; while Net income increased 15% to Php 11.6 billion.
Divisional Performance
Sales from Branded Consumer Foods (BCF), a combination of both domestic and international units but excluding the packaging division, decreased by 3% this year, amounting to Php 103.4 billion. This is a result of the retail trade and market slowdown after global lockdowns which put physical limitations on consumers.
In BCF Philippines, we witnessed a similar sales performance from last year, arriving at Php 61.2 billion. Profit growth was sustained with better price/cost mix, as reflected in the 6% improvement of our profit.
The domestic segment showed strong market share gains despite flattish sales. We expect to regain traction especially in the Ready-to-Drink Beverages once the market stabilizes.
BCF International sales ended at Php 41.2 billion, declining by 5% as it was held back by significant foreign exchange devaluation. Sales however was flat on a constant currency basis. Several Countries, Particularly in the ASEAN region, were impacted by macroeconomic and retail trade contractions during the early part of 2020. As conditions began to improve, markets started to recover and stabilize from their first semester positions.
Lastly, our Agro-Industrial & Commodities (AIC) division ended the year with Php 29.6 billion in sales, a 7% increase versus last year. Top line growth was driven by the Sugar and Renewables (SURE) division, which increased by 33%, inclusive of the last quarter acquisition of La Carlota sugar mill and Roxol distillery. This strong performance from SURE plus initiatives from other AIC segments, worked to offset the lower volumes in hogs business caused by downsized operations. AIC profits increased across all businesses by 19% to end at Php 5.7 billion.
Financial Highlights
Other Updates
With the acquisition of Central Azucarera de La Carlota and Roxol Bioenergy Corporation mid-year, we have solidified our position as the largest sugar producer in the country. We’re optimistic that these acquisitions will further strengthen our Commodities operations and contribute to strong growth in the future.
Moving forward
2020 was a testament to our fortitude and integrity in service. In facing the trials brought about by COVID-19, URC rose above expectations with notable accomplishments.
In the Philippines, we were recognized by the Department of Trade and Industry (DTI) for being the country’s Top Processed Food and Beverage exporter. We reached a record high of approximately USD 30 million in 2019 export sales, as we further strengthened our Global Exports team. We also recognized with several customer awards for our resiliency and support to retailers in the face of pandemic.
Extending our How-To-Win and Where-To-Play strategies overseas was also well-received by consumers and industry fellows alike. For URC Vietnam, it was lauded as one of the Top Sustainable Businesses in the country with its application of our People and Planet Friendly practices. Our Thailand unit delighted customers with innovative products, as they received Marketeer Thailand’s No.1 Brand award for Biscuits & Crackers categories.
More importantly, we extended crucial help to frontliners and communities. By prioritizing the well-being of each life we touch, we’ve contributed to the nation’s resurgence efforts in the countries we operate in.
Collectively, these achievements give us a renewed sense of confidence to pursue greater endeavours in 2021.
Our 2035 Mindset
“Our transition to becoming a sustainable global enterprise shows promise for many win-win returns.”
A bright future is in full view. URC is nurturing healthy ambition by setting its sights on the long game. While external factors remain, such as market recovery rates post-pandemic, we’re optimistic about our growth trajectory.
With our healthy balance sheet and cash position, we are poised to serve a larger base of consumers, particularly with the steady performance of our global business units. Our transition to becoming a sustainable global enterprise shows promise as we continue to build organizational capability and develop world class talents.
Our product development program keeps alive URC’s entrepreneurial mindset with a roster of attractive and innovative products in the pipeline for consumers to enjoy. And our business model is grounded on pragmatic and balanced decision-making centered on long-term value-creation.
As URC celebrates 65 years of growth and expansion, we refresh our Purpose, Values, and Ambition to remind us and guide us why we exist, how we show up every day, and where we are going, standing on the success of the past 65 years.
As we face the challenges of 2021 head-on, URC is prepared to navigate and mobilize in the face of change. We will build on every valuable insight and experience from 2020, stay attuned to market trends, and adapt with agility.
We would like to extend our utmost gratitude to you, our shareholders, for your continued trust, confidence, and support for URC.
Thank you very much.
Irwin C. Lee
President & CEO
