August 13, 2008


RFM earnings up by 7 percent

Philippine food and beverage conglomerate RFM Corporation reported a 7.1 percent rise in net profit in the first half this year to P132.1 million amid rising fuel and food prices.


In a financial statement, RFM points the growth in net earnings to improved sales of its branded consumer products, amid regulated price increases across its food and drink categories.


Despite growth of its food and drink businesses, RFM merely replicated last year's consolidated revenues of P3.5 billion for the period January to June this year, primarily due to a slowdown in real estate development.


RFM said better plant efficiencies and cost management have alleviated the rising costs of domestic raw materials, freight and handling, utilities and wages.


In addition, operating expenses such as selling and marketing costs have been contained, which further helped in sustaining the group's profitability.


In the second quarter this year, RFM's net earnings went up five percent to P63.7 million from P60.7 million on consolidated revenues of P1.9 billion which was three percent higher than in the same period a year ago.


RFM president and chief executive officer Jose Concepcion III said the company did not jack up prices on major items such as corned beef with real American beef (175-gm), Selecta Fortified milk (regular and one-liter sizes), Mighty Meaty hotdog (one-kilo) and the Selecta ice cream (3-in-1) as a gift to its loyal customers.


To counteract the effects of higher cost of wheat, RFM has adopted and brought to commercial levels the production of Proud Harvest veggie canton noodles, a squash-based canton noodle developed with the Department of Science and Technology and the company's research and development group. This has reduced the cost of noodle-making by 10 to 15 percent, Concepcion said.


Selecta ice cream, RFM's joint product venture with Unilever, reported strong performance during the summer months, further strengthening its market leadership in ice cream.


RFM  has drawn up a five-year strategic plan aimed at  doubling the size of its business to P14 billion by 2012  even as it aims to eventually divest from the real estate development business.


Under the five-year plan, RFM is eyeing a net income of P710 million by 2012 from the projected P288 million profit this year. Last year, the company posted net earnings of P234 million on sales of P7 billion.


By 2012, RFM is also targeting to achieve a return on equity of at least 12 percent and a share price valuation of 14 times price earnings.

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