By Arra B. Francia, Senior Reporter
RFM CORP. is allocating over P400 million in capital expenditures (capex) this year to support the growth of its milk and pasta sauce products.
The listed food and beverage manufacturer said on Wednesday that it will spend P320 million to expand milk capacity by 30% this year, driven by the strong performance of the Selecta Fortified Milk brand during the first half of the year.
“The growth in milk is forcing us to (toll production). We can’t anymore produce the demand inside our facilities, we’re actually asking somebody to do it for us. Nagto-toll na tayo,” RFM Chief Financial Officer Enrique Oliver I. Rey-Matias told reporters after the company’s annual stockholders’ meeting in Mandaluyong yesterday.
RFM will also spend about P90 million to construct two additional lines for the production of spaghetti sauces to accommodate additional demand. The company currently has four production lines dedicated to spaghetti sauce in its factory.
This year’s capex is significantly lower than the P1.41 billion it spent in 2018. Mr. Rey-Matias noted that they have already completed the P1.1-billion expansion of its ice cream business, boosting production by 40%.
It also spent P240 million to upgrade its flour mill production, and another P70 million for a warehouse in Cabuyao.
Meanwhile, the growth of its milk and pasta business, complemented by its ice cream segment, pushed net income 10.5% higher to P580 million in the first half of 2019. Net sales stood at P7 billion, 10.3% higher year on year.
Net income for the second quarter alone went up by 9.8% to P359 million, partially driven by higher ice cream sales during the long, hot summer.
“Essentially you have three growth drivers of sales. Of course there’s ice cream, then for pasta there’s Royal and Fiesta, we’re seeing double-digit also, and then ’yung milk…we’re getting good double-digit growth,” Mr. Rey-Matias explained.
RFM’s brands include Selecta for ice cream and milk, Fiesta and Royal for pasta, and White King for mixes.
The company on Wednesday declared P271 million in cash dividends, equivalent to 7.74 centavos per share for shareholders as of Aug. 7. The dividends will be distributed on Sept. 4. This is the company’s second cash dividend declaration for the year, for a total of P553 million or 15.79 centavos per share.
Incorporated in 1957, RFM also engages in non-food businesses, including barging services and leasing of commercial or office spaces for its operating divisions.
RFM shares were unchanged at P5.10 each at the stock exchange Wednesday.
