RFM posts flat Q2 net earnings

RFM Corp. saw flat earnings growth during the second quarter of 2018, as softer prices of flour and higher costs of raw materials offset a double-digit increase in revenues.
In a regulatory filing, the listed food and beverage firm reported that its net income attributable to equity holders of the parent reached P314 million during the April to June period, 1.2% higher than the P310 million it posted in the same period a year ago.
Revenues for the quarter climbed 13% to P3.5 billion from the P3.1 billion in the same period a year ago.
This brought the company’s first-half attributable profit to P525 million, up by 3% year-on-year, on the back of an 11.6% increase in revenues to P6.31 billion.
RFM attributed the higher revenues to the performance of its ice cream, flour, pasta, milk, and private label products. Its ice cream brand Selecta, for instance, generated an 11% increase in sales, while institutional sales including the bakery business went up by 8%.
The company’s other brands, including Fiesta and Royal for pasta, White King Mixes and Selecta Milk, collectively grew by 17% in the first semester.
“The healthy growth of the branded consumer businesses brought about a 3% growth in net income to P525 million, despite the headwinds from softening prices of flour and the rise in commodity prices such as wheat, paper and sugar, as well as the peso depreciation,” RFM President and Chief Executive Officer Jose Ma. A. Concepcion III said in a statement.
Mr. Concepcion said the growth in pasta, ice cream and white milk units will protect the firm from the impact of higher commodity prices.
“We continue to focus on our core strengths in flour, pasta, ice cream and milk… in addition to the big ticket projects of the ice cream and flour segments, we continue to invest in additional warehousing capacity for more efficient supply chain operations,” he said.
The company earlier said it has committed to spend P1 billion in capital expenditures this year.
With the first half results, Mr. Concepcion expects the firm to deliver a double-digit top-line growth and high single-digit profit increase.
Incorporated in 1957 originally as Republic Flour Mills, Inc., RFM’s business is divided into two segments: the institutional segment for the flour, bakery, and other bakery products to institutional customers, and the consumer segment that manufactures and sells ice cream, milk, juices, pasta, and other rice-based mixes.
RFM shares closed unchanged at P4.65 each on Monday. — Arra B. Francia