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Business

Universal Robina regaining lost market share in Vietnam

Philippine food and beverage company expanding production in Thailand

MANILA -- Philippine food and beverage company Universal Robina aims to recover the bulk of its lost market in Vietnam this year, after a food safety scandal in 2016 that sent sales plunging and shares dipping.

CEO Lance Gokongwei told shareholders at a meeting Wednesday that Universal Robina looks to achieve 60-70% of peak Vietnamese sales in order to generate positive earnings before tax for operations in that country. The company historically earned sales as high as $20 million monthly in Vietnam, one of its largest markets in Southeast Asia and Oceania.

The company's Rong Do energy beverage and C2 ready-to-drink tea brands were found to have exceeded Vietnam's lead content standards last year, triggering a sizable recall in May 2016 as competitors launched online campaigns to disparage the brands.

Universal Robina's sales in June and July 2016 plunged to 15% of their peak, having stood at 94% before the recall. Sales have settled to around 45% of the peak during the first quarter of 2017.

The Philippine giant has been cleared by Vietnamese food safety authorities and has moved quickly to rebuild its brands. The company debuted a new brand identity and secured certifications from independent organizations assuring the quality of its factories.

"We've hired a president who has great experience in Vietnamese so that we can coordinate much better with the local government," Gokongwei said.

But it's "hard to say" when the company will fully recover its market share, Gokongwei said. "We don't have expectations. We just knew that it would be difficult," he said.

The lead scandal in Vietnam is Universal Robina's biggest overseas food safety issue to date, a company official said, leaving a dent in the bottom line.

Net income fell 7% to 13.1 billion pesos ($259 million) last year for the company, which also produces salty snacks, instant noodles, chocolates, candies and wafers. Sales grew 1% to 112.6 billion pesos as the company also faced increasing competition at home, particularly in the salted snack and instant coffee segments. In the first quarter of 2017, sales climbed 8% to 30.7 billion pesos while net profit declined 4% to 3.4 billion pesos.

Universal Robina's shares have dipped about 20% from a year ago, one of the biggest losers among the Philippine blue-chip companies.

The company is allocating 7 billion pesos for capital expenditures this year to expand domestic and overseas production. A new manufacturing line will be added in Thailand, Gokongwei said, bolstering biscuit production by 20% there.

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