Coffee segment’s resurgence lifts Universal Robina stock

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By Mark T. Amoguis
Senior Researcher

GROWTH prospects from Universal Robina Corp.’s (URC) coffee business made the Gokongwei-led firm one of the most actively traded issues in the local bourse last week.

A total of 6.79 million URC shares worth P1.12 billion exchanged hands at the trading floor from July 29 to Aug. 2.

URC ended P169.60 apiece last Friday, down 0.8% from its July 26 finish. On the other hand, the stock rallied by 33% since the start of the year.

AP Securities, Inc. Research Analyst Robert Miguel B. Ong said in a phone interview that profit taking prior to the “relatively good” second-quarter earnings report last Thursday drove much of the stock’s movement last week.

Meanwhile, Diversified Securities, Inc. Trader Aniceto K. Pangan in a mobile message noted the “sustained turnaround story to positive growth” of URC’s coffee segment, which boosted the company’s growth performance in the second quarter.

In a regulatory filing last Thursday, the listed food and beverage firm reported an attributable net income of P2.09 billion in the second quarter, 12.4% higher than it booked in the same quarter last year, amid the strong performance of its local coffee segment led by Great Taste.

This brought URC’s attributable bottom line in the first semester to P5.13 billion, up 6.6% from the comparable six months last year, as its top line went up 5.6% to P67.04 billion.

PSE data showed net foreign selling reaching P140.97 million last Wednesday, a day before the release of the company’s earnings report. Last Friday, foreigners were net buyers of the stock totaling P34.71 million.

In late May, URC President and Chief Executive Officer Irwin C. Lee told reporters after the company’s annual shareholders’ meeting in Pasig City that their market share for the coffee business dropped to about 20% last year, but has since started to improve to the mid-20s level.

URC earlier implemented initiatives to improve its coffee business in the country, which had been a negative contributor to earnings in previous years. Among these initiatives include the launch of its three new instant coffee products last January to address gaps in the market.

The company is looking at a 7-9% increase in sales this year, counting on growth of its food and agro-industrial businesses and the recovery of its coffee segment, which shows a “very strong growth momentum.”

URC has allotted P9.1 billion in capital expenditures for the year, mostly for capacity expansion

The company is known for its brands like Jack N’ Jill, Nissin Cup Noodles, C2, Blend 45, Great Taste, Vitasoy, and Calbee.

For this week, AP Securities’ Mr. Ong pegged the stock’s support at P155 and resistance at P170.

For Diversified Securities’ Mr. Pangan, URC’s support and resistance levels are placed at P160 per share and P180 per share, respectively.