Business Plan

Submitted by:

Joann G. Uypico

BSBA 4C-Finmgt.

Submitted to:

Mrs. Magno

Universal Robina Corporation

I. EXECUTIVE SUMMARY

a. Objective

• Leading world-class brands• Customer-focused, lowest cost organization• Innovative new products and processes• Inspired and competent Human Resources• Responsible business and community partner• Superior return to shareholders

b. Mission and Vision Statement

Mission

We are the dominant market leader in the Philippine snack foods industry. Our leading brands offer consumers the best in enjoyment, quality, value and convenience.

Vision

Delighting the consumers with trusted brands of exceptional quality and value making lives a truly fun experience.

.

II. COMPANY SUMMARY

a. Company History

Universal Robina Corporation (URC) traces its beginnings all the way back to 1954. John Gokongwei was doing very well then as a trader/importer. He had learned the trade when his father died before the war, and had worked hard through the war and postwar years to prosper. However, while he thrived, he took a long hard look at his company, and correctly predicted that trading would remain a low-margin business.

On the other hand, a successful manufacturer controlling its own production and distribution would command more profitable margins. Mr. John decided to construct a corn milling plant to produce glucose and cornstarch, Universal Corn Products (UCP), the first linchpin of the company that would become the URC we know today.

For a time, business was good. However, Mr. John was still looking ahead, working with an eye towards the future. While the business was doing very well, it was producing essentially a commodity, which a customer could easily access elsewhere. To stay ahead in the game, Mr. John had to diversify by producing and marketing his own branded consumer foods, similar to the multinational companies in the country like Nestle and Procter & Gamble. In a sense, he wanted to put up the first ‘local’ MNC, borne out of their best practices.

Thus, in 1961, Consolidated Food Corporation was born. Their first ‘home run’ product was Blend 45, the first locally-manufactured coffee blend, dubbed as the “Pinoy coffee”. This became the largest-selling coffee brand in the market, even beating market leaders Café Puro and Nescafe.After coffee came chocolates. Nips, a panned chocolate was a staple of Filipino childhood.

In 1963, Robina Farms started operations, beginning with poultry products. This was also the beginning of the vertical integration of the Gokongwei businesses, as the farms would be able to purchase feeds from UCP in the future.  Later that decade, Robichem Laboratories would be put up, to cater to the veterinary needs of the farms businesses. Robina Farms expanded as it entered the hogs business in the latter part of the 70s.1966 saw the establishment of Universal Robina Corporation, which pioneered the salty snacks industry through Chiz Curls, Chippy, and Potato Chips, under the “Jack ‘n Jill” brand. Other snack products would follow over the years, as the company successfully introduced market leaders like Pretzels, Piattos, and Maxx.

The coming decades saw more acquisitions and  expansion. In the early 1970s, the family entered the commodities business through the formation of Continental Milling Corporation, for flour milling and production. The late 1980s brought the acquisition of three sugar mills and refineries, under URC Sugar. These two businesses provided stable cash flows, and allowed for further vertical integration in the supply chain, to help URC weather any volatility in the cyclical commodities markets. In line with this strategy, the late 1990s saw the entry of URC into the plastics business, through URC Packaging.

While the businesses  became more diversified, the companies were slowly  integrated in order to streamline and minimize costs. In 2005, the present structure of the group was completed. All the different companies are now organized under the Universal Robina Corporation umbrella, divided into 3 focused groups:

the Branded Consumer Food Group, comprised of BCFG Domestic (including packaging) and International

the Agro-Industrial group, comprised of Universal Corn Products, Robina Farms, and Robichem and the Commodities group, with the Sugar and Flour divisions

b. COMPANY LOCATIONS

Location Type of Facility Owned/Rented

Pasig City (4) Branded consumer food plants, feedmills and flourmill

Owned Good

Libis, Quezon City (1) Branded consumer food plant Owned GoodCanlubang, Laguna (1) Branded consumer food plant Owned GoodMandaue City, Cebu (2) Branded consumer food plant,

poultry farm and feedmillOwned Good

Luisita, Tarlac (1) Branded consumer food plant Owned GoodSan Fernando, Pampanga (2) Branded consumer food plants Owned Good

Dasmariñas, Cavite (2) Branded consumer food plants Owned Good

Cagayan de Oro (1) Branded consumer food plant

Owned Good

San Pedro, Laguna (2) Branded consumer food plant Rented Good

Calamba, Laguna (1) Branded consumer food plant Rented Good

San Pablo, Laguna (1) Branded consumer food plant Owned GoodAntipolo, Rizal (4) Poultry and piggery farm Owned/rented Good

Teresa, Rizal (2) Poultry and piggery farms Owned/rented Good

Angono, Rizal (1) Poultry farm Owned GoodTaytay, Rizal (1) Poultry farm Rented GoodNaic Cavite (1) Poultry farm Owned GoodSan Miguel, Bulacan (3) Poultry and piggery farms Owned Good

III. PRODUCTS and SERVICES

a. Products and Services Description

1.Branded Consumer Foods Group - Domestic

Universal Robina Corporation (URC) is the leading branded convenience food and beverage company in the Philippines. Touted as the country’s first “Philippine multinational” as it has the widest geographical footprint among local food manufacturers, URC has blazed the trail for the branded foods industry. The company has shaped the competitive landscape of local consumer brands through its innovative products, wide distribution, and high-impact marketing. URC is best known for manufacturing and distributing high-performing products such as Chippy, Nova and other snack foods under the Jack ‘n Jill mega brand, Nissin and Payless instant noodles, as well as Hunt’s tomato-based products.

URC is also a trendsetter in the beverage industry with its coffee and ready-to-drink products. It grew the local non-carbonated beverage market with the successful launch and continuing promotion of C2 Cool & Clean Green Tea. Building on the global trend towards health and wellness, C2 spearheaded the expansion of a new and high-growth segment in the Philippine beverage industry: the green tea segment. URC built on that success with forays into other areas of the non-carbonated beverage market, such as juices, energy drinks, and ready-to-drink coffee, among others.

Snackfoods

With a long heritage that began in the 1960s, URC’s snack foods brands are well-loved by generations of Filipinos. Many have grown up with the comforting crunch of “Chippy” and “Chiz Curls”, and today’s young adults have fond memories of eating along to the well-loved “Nips” jingle of days passed. From heritage brands such as these, to newer products such as Magic, Nova, and Dewberry, URC has developed the largest and most diverse portfolio of snackfood products in the Philippines to fill everyone’s snacking needs. And now, the products you grew up with and continue to snack on are all under the “Jack ‘n Jill” megabrand, a name synonymous with consistent quality, great value, and fun.

Savory SnacksOwned Good URC is the market leader in savory snacks, and has welcomed Granny

Goose snacks into its fold.CornChips: Chippy,Mr.Chips,Taquitos,Tostillas NaturalPotato:PotatoChips,V-Cut FabricatedPotato: Piattos,RollerCoaster Extruded/Pelletized: ChizCurls Multi-Grain: Nova MixedSnacks: Pic-A Granny Goose: Tortillos, Kornets

BiscuitsURC is one of the leading biscuit producers in the country.Cookies: Presto,Cream-O,Dewberry Crackers: MagicFlakes,MagicCreams,MagicFlavors Wafers: Hello!Coated,Hello!Pipers,Hello!Glazed,WafretsSticks Pretzels: Choco Pretzels, Knots

CakesURC is an innovative player in the cakes category.QuakeBars Quake Overload

CandiesURC is the market leader in candies.HardBoiled: Maxx,Dynamite Deposited: X.O. Gummies/Jellies: JojoGummies Lollipops: StarPops Marshmallows: Wiggles Soft: Lush

ChocolatesURC is the market leader in chocolates.Enrobed: Cloud9,BigBang,Chooey,MonsterMunch Panned: Nips

Agro-Industrial Group

URC’s Agro-Industrial and Commodity Food Groups are engaged in a wide range of industries including the production and distribution of animal feeds, glucose and soya products, hogs and poultry farming, production and distribution of animal health products, as well as flour and sugar milling and distribution.

Universal Corn Products

Universal Corn Products (UCP) is one of the leaders in the Philippine animal feed industry with combined milling capacities of 1,200MT per day from its plants in Manila and Cebu.

Its line of nutritionally balanced and cost effective hogs, poultry, fish and game fowl feeds, marketed under the brand name RobinaStarfeeds, is formulated by a top-caliber nutrition team and have gained wide acceptance among animal raisers in the country. They come in pellet, crumbled and mash form.UCP likewise, produces and sells liquid glucose and quality soya products, which are used in the production of confectionery products and animal feeds, respectively.

Robichem

Robichem manufactures, distributes and sells a wide range of high-quality and well-known animal health products such as vaccines, water solubles, injectables, feeds supplements and disinfectants, which are both marketed commercially and used by Robina Farms because of its proven effectiveness and cost-efficiency.Robichem is the exclusive distributor of multinational companies namely, Janssen Animal Health and Malaysian Vaccines Pharmaceuticals.

Robina Farms-Hogs

Robina Farms (RF) Hogs breeds and sells prime finisher hogs, piglets and breeder stocks such as its own Grandeur Boar and Grand Dame gilt.RF- hog production facilities, located in Rizal, Novaliches, Bulacan and Batangas maintain 15,500 sows at any given time; and are reputed to be one of the most modern swine facilities in the country.

Robina Farms-Poultry

RF also produces superior day-old broiler and layer chicks from the world-class breeds such as Hubbard, Shaver and Hyline.RF poultry production facilities are located in Cebu, Rizal and Bulacan, with a total farm capacity of 500,000 breeders.RF is a formidable player in both the Layer and Broiler industries; and is the number one day-old chick supplier in the country.

Commodity Foods Group

URC’s Commodity Foods Group is engaged in flour and sugar milling and distribution, and sells its products to commercial and institutional accounts.

URC Flour Division

URC Flour produces and sells Hard and Soft Wheat Flour to both commercial and institutional accounts. The division also supplies the local and export flour requirements of the URC Branded Consumer Food Group and URC International respectively. Other product offerings are flour-milling by-products such as wheat germ, bran and pollard.

The company also manufactures and sells spaghetti and macaroni products under the brand name EL REAL and toll manufactures for other food companies.URC Flour has a total flour milling capacity of 1,550 metric tons per day.

URC Sugar Division

URC Sugar operates 4 sugar mills and 3 refineries in Luzon and Visayas, and is among the largest sugar millers/refiners in the country.URSUMCO (Negros Oriental), SONEDCO (Negros Occidental), and CARSUMCO (Cagayan Valley) provide sugar cane milling and refining services, trades raw sugar and sells refined sugar and molasses. PASSI (Iloilo) provides sugar cane milling services and trades raw sugar and molasses.

URC Sugar has a total sugar milling capacity of approximately 29,000 tons of cane per day. It also has a sugar refining capacity of approximately 32,000 50-kg bags of sugar per day

URC Packaging Division

URC Packaging Division produces and sells a wide range of Bi-axially Oriented Polypropylene (BOPP) films, primarily used for packaging of various consumer products.

The BOPP plant, located in Simlong, Batangas, is equipped with Bruckner technology and has a rated capacity of 33,000 metric tons per annum.

b. Competitive Comparison

The BCF business is highly competitive and competition varies by country and product category. The Company believes that the principal competitive factors include price, taste, quality, convenience, brand recognition and awareness, advertising and marketing, availability of products and ability to get its product widely distributed. Generally, the Company faces competition from both local and multinational companies in all of its markets.

In the Philippines, major competitors in the market segments in which it competes include Liwayway Manufacturing Corp., Columbia Foods International, Republic Biscuit Corporation, Suncrest Foods Inc., Del Monte Phil. Inc., and - Monde Nissin Corporation, Nestle Philippines Inc., San Miguel Pure Foods Company Inc. and Kraft Foods Inc.

. Competition in the Philippine food and beverage industry is expected to increase in the future with increased liberalization of trade by the Philippine government and the predicted accompanying growth in imports due to the World Trade Organization (WTO) and ASEAN Free Trade Area (AFTA). Under the WTO, tariff rates on food and agricultural items are being decreased and import quotas are being eliminated among member countries, including the Philippines. AFTA is a free trade area formed by 10 South East Asian countries, including the Philippines. Under the AFTA, tariffs on manufactured goods, including processed agricultural products, are being minimized or eliminated over a 15year period starting from January 1, 1993, and non-tariff barriers will be subsequently phased out.

c. Future Products and Services

Powdered Juice with different flavors

IV. MARKET ANALYSIS SUMMARY

a. Market Segmentation

Market segment consists of a large identifiable group within a market with similar wants, purchasing power, geographical location, buying attitudes, or buying habits.

In a total market, there is always some diversity among the buyers. Within same general market there are group of customers, market segments, with different wants, buying preferences, product use behavior. In some markets these differences are relatively minor, and a single marketing mix can satisfy benefits sought by the consumer.The market segment is based

on need based and it’s targeted for everyone who cares for his/her life and wants to maintain good health.

b. Target Market Segment Strategy

1 .Market Growth

In the growth stage, or market-acceptance stage, sales and profits rise, frequently at a rapid rate. Competitors enter the market, often in large numbers if the profit outlook is particularly attractive.

c. Industry Analysis

1. Distribution Patterns

The Company has developed an effective nationwide distribution chain and sales network that it believes provide its competitive advantage. The Company sells its branded food products primarily to supermarkets, as well as directly to top wholesalers, large convenience stores, large scale trading companies and regional distributors, which in turn sell its products to other small retailers and down line markets. The Company’s branded consumer food products are distributed to approximately 124,000 outlets in the Philippines and sold through its direct sales force and regional distributors.

2. Main Competitors

Del Monte Pacific Limited Company Profile

This garden of eatin' is located in the Pacific Rim. Del Monte Pacific is a leading food company that markets canned goods, fresh produce, and packaged foods in China, India, and the Philippines. It produces canned fruits and vegetables and processed foods such as condiments, pasta, and sauces. The company also markets fruit and vegetable juices, as well as fresh pineapples from its company-owned plantation. While not part of US-based Del Monte Foods, Del Monte Pacific does own rights to the Del Monte brand in the Philippines. Its international

brands include FieldFresh (India), Great Lakes (China), and premium S&W. NutriAsia Group, controlled by the Campos family, owns nearly 80% of the company.

San Miguel Corporation Company Profile

A household name because of its brewery biz, San Miguel Corporation (SMC) is one of the largest food-to-power conglomerates in the Philippines. It operates more than 100 facilities in Southeast Asia and China. The company's flagship unit is San Miguel Brewery (beer and liquor), while its Pure Food unit manufactures a variety of staples, including meats, dairy products, and coffee. SMC also has packaging operations. It owns a major stake in the country's biggest oil refiner, Petron, a 33% interest in Manila Electric, and a joint venture with Qatar Telecom that operates mobile and broadband businesses in the Philippines. SMC has other investments in energy, telecommunications, mining, construction, and banking.

V. STRATEGY and IMPLEMENTATION

a. Competitive Edge

The Company believes that its emphasis on marketing, product innovation and quality, and strong brand equity has played a key role in its success in achieving leading market shares in the different categories where it competes. In particular, URC launched “Jack ‘n Jill” as a master umbrella brand in order to enhance customer recognition of its products. URC devotes significant expenditures to support advertising and branding to differentiate its products and further expand market share both in the Philippines and in its overseas markets, including funding for advertising campaigns such as television commercials and radio and print advertisements, as well as promotions for new product launches by spending on average 5.6% of its branded consumer food division’s net sales this year.

b. Marketing Strategy

URC intends to enlarge its distribution network coverage in the Philippines by increasing the number of retail outlets that its sales force and distributors directly service. The branded consumer food products are generally sold by the Company from salesmen to wholesalers or supermarkets, and regional distributors to small retail outlets. 15 to 30 day credit terms are extended to wholesalers, supermarkets and regional distributors.

1. Positioning Statements

Universal Robina Corporation considers itself as market follower, creating lines of products that mimic local and global trends. It continues to offer local versions of imported goods with the introduction of Spuds that is heavily similar to well-sought goods such as Pringles Potato chips and Lays. Nonetheless, the company still continues to improve and invest in Research and Development in creating new products to match the consumers wants.

The company also gains a lot of loyalty from its customers by keeping its products at low prices while still providing them with good quality products with the right amount of benefits. In catering to the demand for cheaper alternatives due to changing times, the company has introduced the Payless Brand, a cheaper brand with about the same benefits of other competing brands. Moreover, changes in price of goods are kept at a minimal rate to retain customer loyalty.

Furthermore, the company provides its consumers with variety of pack sizes ranging from small to family-sized packed goods to cater to all demographic. Its bottled drinks are available in three sizes: small, medium and large or litrosized bottles. Their current packaging strategy is able to cater to both individual users and family-oriented households. Its Jack ‘n Jill product line offers it snack products in small, regular and family-sized packs. Recently, the company introduced the mixed-pack brand, Pic-A to cater to families and barkadas.

2. Pricing Strategy

Increase in prices is kept at a minimal rate. The company tries to keep its products at low prices to gain customer loyalty. In addition to their current strategy, the company tries to produce cheaper alternatives of most commonly sought products such as the introduction of the Payless Brand in response to the economic downfall. Furthermore, 2010 figures have showed no changes in the prices of ready-to-drink or RTD tea in the market.

3. Promotion Strategy

The company is heavy on promoting its products through television, radio and print advertisements, event sponsorships, and free samplings. Most of the company’s advertisements on TV and radio commercials portray family and friendship themes. Its advertisement usually centers on stories that attracts the youth and family households with its subtle humor and heartwarming tactics. Moreover, it continues to sponsor business, educational and cultural events by providing them with free samples of their products. The company’s promoters travel across the country to join local festivals to further promote their current and upcoming products.

4. Distribution Patterns

The Company has developed an effective nationwide distribution chain and sales network that it believes provide its competitive advantage. The Company sells its branded food products primarily to supermarkets, as well as directly to top wholesalers, large convenience stores, large scale trading companies and regional distributors, which in turn sell its products to other small retailers and down line markets. The Company’s branded consumer food products are distributed to approximately 124,000 outlets in the Philippines and sold through its direct sales force and regional distributors.

5. Marketing Strategy

The company is currently aiming to further widen its distribution by catering to traditional convenience stores or sari-sari stores located in remote areas and unreserved provincial areas across the country. In doing so, the company will be able to reach more households, thus reaching its goal to remain in the hearts of every Filipino. Moreover, the company continues to strengthen its Research and Development (R&D) department to be able to provide consumers with innovative products based on current and growing trends to meet the ever-changing demand of the Filipinos.

VI. MANAGEMENT SUMMARY

a. Organizational Structure

b. Management Team

Cornelio S. Mapa – Executive Vice President, URC BCFG PhilippinesPatrick O. Ng – Executive Vice President, URC InternationalEugenie M.L. Villena – Senior Vice President – Chief Financial OfficerBJ M. Sebastian – Senior Vice President – Chief StrategistConstante T. Santos – Senior Vice President – Corporate ControllerNicasio L. Lim – Senior Vice President – Corporate Human ResourcesGeraldo N. Florencio – First Vice President - Controller

John L. Gokongwei, Jr Board of Director

James L. Go Chairman and Chief Executive

Lance Y. Gokongwei President and Chief Operating Officer

Patrick Henry C. GoDirector and Vice President

Frederick D. Go President and Chief Operating Officer

Robert G. Coyiuto, Jr Director

Ester T. Ang – Vice President - TreasurerRosalinda F. Rivera – Corporate Secretary

VII. FINANCIAL PLAN

a. Projected Profit And Loss

Revenues 50,453.00

TOTAL REVENUES 50,453.00

Cost Of Goods Sold 37,602.90

GROSS PROFIT 12,850.00

Selling General & Admin Expenses, Total 8,199.30

Advertising Expense 8,199.30

OPERATING INCOME 4,650.70

Interest Expense -1,399.40

Interest And Investment Income 1,198.70

Other Non-Operating Expenses, Total -207

Other Non-Operating Income (Expenses) -186.2

Gain (Loss) On Sale Of Investments 734.7

Gain (Loss) On Sale Of Assets 20

Other Unusual Items, Total -567.2

EBT, INCLUDING UNUSUAL ITEMS 4,430.50

Income Tax Expense 322.6Earnings From Continuing Operations 4,107.90

NET INCOME 3,887.40NET INCOME TO COMMON

INCLUDING EXTRA ITEMS3,887.40

NET INCOME TO COMMON EXCLUDING EXTRA ITEMS

3,887.40

b. Projected Cash Flow

NET INCOME 3,887.40

DEPRECIATION & AMORTIZATION, TOTAL

3,038.90

(Gain) Loss From Sale Of Asset -20

(Gain) Loss On Sale Of Investment -548.6

Asset Writedown& Restructuring Costs -96.8

(Income) Loss On Equity Investments -25.2

Provision & Write-Off Of Bad Debts 228.3

Other Operating Activities 263.9

CASH FROM OPERATIONS 5,636.80

Capital Expenditure -3,874.70

Sale Of Property, Plant, And Equipment 94.1

Cash Acquisitions --

Divestitures --

CASH FROM INVESTING -4,133.20

Short-Term Debt Issued 5,186.80

Long-Term Debt Issued 3,044.70Short Term Debt Repaid -8,069.50Long Term Debt Repaid -267.8

TOTAL DEBT REPAID -8,337.30

Issuance Of Common Stock --

Repurchase Of Common Stock -18

Common Dividends Paid -538.1

Common And/Or Preferred Dividends Paid

--

TOTAL DIVIDEND PAID -538.1

Special Dividend Paid --

CASH FROM FINANCING -662.1

NET CHANGE IN CASH 841.5

c. Projected Balance Sheet

Assets  

Cash And Equivalents 3,057.10

Short-Term Investments 7,329.40

Trading Asset Securities 7,249.90

TOTAL CASH AND SHORT TERM INVESTMENTS

17,636.40

Accounts Receivable 5,781.30

Other Receivables 1,303.30

Inventory 6,118.00

Prepaid Expenses 149.7

Other Current Assets 1,639.20

TOTAL CURRENT ASSETS 32,627.90

NET PROPERTY PLANT AND EQUIPMENT

25,805.80

Long-Term Investments 88.3

Goodwill 890.4

Other Intangibles 753.6

Other Long-Term Assets 575.2

TOTAL ASSETS 60,918.00LIABILITIES & EQUITY  

Accounts Payable 3,434.00Accrued Expenses 1,527.90

Short-Term Borrowings 5,665.20

Current Portion Of Long-Term Debt/Capital Lease

27.8

Other Current Liabilities 958.5

TOTAL CURRENT LIABILITIES 11,791.50

Long-Term Debt 12,219.00

Minority Interest 573.1

Other Liabilities, Total 421.1

TOTAL LIABILITIES 24,431.60

Common Stock 2,227.60

Additional Paid In Capital 11,227.90

Retained Earnings 22,547.50Treasury Stock -934.7

Comprehensive Income And Other 844.9

TOTAL COMMON EQUITY 35,913.20

TOTAL EQUITY 36,486.30

TOTAL LIABILITIES AND EQUITY 60,918.00

d. Long-term Plan

Universal Robina Corporation will produce different kinds of Pasta sauce that will suit to the taste of every Filipino people at its affordable price and high quality product exported from Casa Visco Company. It will soon be launch in the market together with the other new products of Universal Robina Corporation.