RFM targets double-digit profit growth this year
By Arra B. Francia
Senior Reporter
FOOD and beverage manufacturer RFM Corp. expects at least a 10% growth in its net income for full year 2019, counting on lower inflation, stabilizing crude oil prices, and the stronger peso in the second semester.
RFM Chief Financial Officer Enrique Oliver I. Rey-Matias cited improvements in the business environment that can help the company achieve its target.
“Last year 6% lang. Maybe this year we might hit double-digit growth. Oil seems to be stabilizing at $60, $59 level. Inflation is low, there’s more consumption, and raw material prices. And then forex is depreciating,” Mr. Rey-Matias told reporters after the company’s annual shareholders’ meeting in Mandaluyong last week.
The Concepcion-led firm also projects its topline to grow by 10-12% this year, given the strong performance of its milk business since the second quarter.
“We’re at 10% already, maybe hopefully up to 12%, that’s what’s normal for us. But with strong milk growth, maybe we’ll go over 12%,” Mr. Rey-Matias said.
Mr. Rey-Matias added that the milk business could help stabilize its topline throughout the year, noting how revenues usually swing due to the seasonality of their products. For instance, the ice cream business strengthens in the first half due to the summer season, while the pasta segment sees higher demand in the second semester due to the Christmas holiday.
RFM’s brands include Selecta for ice cream and milk, Fiesta and Royal for pasta, and White King for mixes.
Ice cream currently accounts for 40% of revenues, followed by pasta and milk at 20-25% and 10%, respectively.
“Milk is growing fast. From 10%, it could go to between 10 to 15%, so pasta and ice cream will get smaller. Somehow, we’ve been fortunate to have that strong growth,” Mr. Rey-Matias said.
The company plans to launch more variants of existing products within the year to take advantage of this growing demand.
The robust performance of its milk business has prompted the company to go into toll production in the first half. It now plans to expand capacity by 30% for P320 million to accommodate further demand.
This expansion is part of the RFM’s capital expenditures worth over P400 million this year. The balance will be used to expand the pasta business production lines.
RFM’s net income attributable to the parent climbed 14.3% to P359 million in the second quarter of 2019, after a 9.8% increase in net revenues to P3.85 billion.
This brought attributable profit 10.5% higher to P580 million in the first six months of the year, with net revenues up 10.3% to P6.96 billion in the same period.
