LISTED food and beverage company RFM Corp. reported a 4% increase in net income to P334 million in the first quarter, driven by higher sales volume and product prices.

“Amid the inflationary situation in the economy today, RFM is trying to balance passing the commodity inflation thru managed price increases on one hand and absorbing the cost inflation on the other hand, because consumer spending power is constrained. We think if we pass on all the cost inflation, there will be demand destruction,” RFM Chief Executive Jose Ma. A. Concepcion III said in a statement on Wednesday.

Sales grew by 17% to P3.9 billion due to volume and price increases in its brands and products, particularly in its ice cream, milk and institutional segments.

“We expect our margins to continue to be under pressure and thus we are cautious in our spending this 2022. We are finishing the capex (capital expenditure) we have already started and we are also reviewing other proposed capex in the meantime,” Mr. Concepcion said.

He said that the “strong pricing power” of the company’s brands, especially in ice cream and milk, helped keep margins from declining.

“The company’s balance sheet remains very strong with excellent liquidity… the rise in raw material prices have also increased the working capital requirements for 2022 but the good cash position of the company funded all of the increase in working capital,” Mr. Concepcion said.

For 2022, the company is looking at continued growth in its topline and single-digit growth to “flattish” income.

“If commodity prices reverse from their steep uptrend, then income could possibly trend higher in the second half of 2022,” Mr. Concepcion said.

From its original business of flour milling, the company diversified into poultry and livestock production and areas of food manufacturing that include flour-based products, margarine, milk and juices, canned and processed meat, ice cream, and bottled mineral water.

RFM also operates non-food businesses such as barging services and leasing of commercial or office spaces.

Its subsidiaries and affiliates in food and non-food businesses include Unilever RFM Ice Cream, Inc.; RFM Foods Philippines Corp.; Southstar Bottled Water Co., Inc.; Engrain-RFM Pacific, Inc.; FWBC Holdings, Inc.; RFM Equities, Inc.; Rizal Lighterage Corp.; WS Holdings, Inc.; and Selecta Wall’s Land Corp.

At the stock exchange, RFM shares ended lower by 10 centavos or 2.28% to finish at P4.29 apiece. — Luisa Maria Jacinta C. Jocson