May 11, 2011
RFM Q1 profit drops 27%
Philippine food and beverage conglomerate RFM Corporation reported a 27-percent drop in first quarter earnings this year due to a slowdown in sales amid a difficult environment.
RFM's profits went down to PHP100 million (US$2.32 million) in January to March this year compared with PHP137.6 million (US$3.20 million) the previous year-period, said Jose Concepcion III, president and chief executive officer.
Concepcion said rising commodity prices like wheat, sugar and milk, as well as power and utilities cost squeezed margins.
Topline sales managed a minimal one percent growth, hitting PHP1.98 billion (US$46.15 million) as against PHP1.96 billion (US$45.70 million) a year earlier.
Concepcion attributed a general softening of the market in many categories as the country's consumer confidence fell during the first quarter due to rising oil and food prices and the political concerns in the Middle East and North Africa.
Concepcion mentioned that sales were also affected by the pre-booking of stocks by the distributors in the previous months in anticipation of price increases. The delayed start of summer also slowed down the consumption patterns, but these segments still registered growth due to product innovations, backed by new marketing campaigns, especially in Selecta ice cream, Fiesta pasta, Selecta milk, the new Sunkist Litro and Swift Corned Beef Swak pack.
RFM is optimistic in the coming months as it focuses and leverages on the strengths of its core products. Selecta Ice Cream, a joint venture with global consumer goods giant Unilever, is further strengthening its hold in the market with its dominant share of 66 percent, while the flour-based businesses led by White King Fiesta continues to improve its market position at 29 percent in the spaghetti pasta category, Concepcion said.
