UNIVERSAL Robina Corp. (URC) is taking off P2.5-P3 billion from its capital expenditure (capex) budget this year as part of efforts to survive the ongoing pandemic.
URC President and Chief Executive Officer Irwin C. Lee told stockholders in a meeting on Thursday the company usually allots capex of about P8-P10 billion every year, but this will have to be reduced in 2020.
“We’ve taken a very hard look at our capex plans for 2020, looked at what can be deferred, what can be saved, prioritizing the most critical ones. We’ve shaved somewhere between P2.5-P3 billion already from the 2020 plan,” he said.
“That’s an important part of shoring up our cash, prioritizing what’s important, and making sure that our capex is still working on the right projects that will help us into the future,” he added.
Mr. Lee said the coronavirus disease 2019 (COVID-19) pandemic has resulted in an uncertain outlook for the company’s future, as the global lockdowns to contain its spread has disrupted URC’s supply chain from raw materials to consumers.
The company’s net sales in the first quarter was tempered to a 0.4% uptick to P33.5 billion due to lower revenues from its international businesses, particularly in Indochina. Sales from its agro-industrial business also declined, partly due to lower hog prices from lingering worries over the African swine fever.
Its net income went down 32% to P2.1 billion during the period, mainly from non-operating foreign exchange losses on balance sheet items.
“We may see months of sporadic production suspension due to recurring quarantines, or raw material supply. It’s not just our operations that matter here. It’s those of our suppliers, of contractors, and of our transportation partners. A lot must go right in a very challenging environment, and not all of it will,” Mr. Lee said.
Despite the current environment, he said URC is confident it can withstand the challenges as it maintains a healthy cash position of P21.8 billion as of end March.
“We are working on capturing learnings on people productivity, planning for a new digital workplace, and overall accelerating our simplification of digital transformation efforts,” Mr. Lee said.
Shares in URC at the stock exchange fell P1 or 0.76% to P132 apiece on Thursday. — Denise A. Valdez