November 24, 2003

Philippines Swift Foods Trim Losses By 64.6% Due To Recovery of Local Poultry Market

Philippines Swift Foods Inc. trimmed its losses by 64.6% in the first nine months this year, attributing the improvement in its financial performance to the recovery of the local poultry market in the third quarter.

The poultry unit of the Concepcion-owned conglomerate RFM Corp., Swift registered a net loss of P191 million in the first nine months, lower than the P540-million loss incurred the previous year-period.

The company said while prices have improved significantly for both live broilers and dressed chicken, this was not enough to cover substantial amount of losses incurred during the first half of 2003.

Net sales fell 32.13% to P2.83 billion from P4.17 billion a year ago, primarily due to lower sales volume attributable to lower consumer spending and the effect of the transfer of meat business to RFM effective October 1, 2002.

The transfer was in line with RFM¡¯s strategy to focus its efforts on strengthening its branded food products.

The transfer included all rights, interest and ownership of Swift over the assets of its meat processing business except a manufacturing plant in Cabuyao, Laguna.

But with the onset of the holiday season, Swift said it expects demand to increase with better selling prices.

Swift is projecting a turnaround in its financial performance next year with the completion of its corporate reorganization.

The company is eyeing a turnaround in its financials next year with a projected net income of P270 million, compared to the estimated net loss of P150 million in 2003. It also expects sales to reach P4.5 billion in 2004.

Swift said it will continue to implement cost-saving measures, such as closing down inefficient and unprofitable branches, and keeping tight control on operating expenses.

Parent firm RFM, on the other hand, intends to focus on the food business under subsidiaries RFM Foods Inc., Swift, and Selecta Dairy Products Inc. RFM¡¯s objectives are to recreate food products to exceed customer expectations and tap the international market to boost its profitability.

Of RFM's subsidiaries, Swift and Selecta are considered to be the "next-best" businesses of the Concepcion-led group since the other firms are all suffering from the slowdown in their respective markets.

Swift - engaged in the manufacturing and trading of poultry products - controls some 21% of the dressed chicken market, second only to San Miguel, which controls 33%.

It sells products like dressed chicken, choice cuts, processed chilled meat, canned meat, and feeds under brand names Swift, Rica, Goldstock, and Blue Ribbon. 

To boost sales, RFM is considering outsourcing its operations even to China, if it could offer lower costs.