RFM trims capex to below P100 million, posts 11% profit rise
By Denise A. Valdez, Reporter
RFM CORP. is cutting its capital expenditures (capex) this year to less than P100 million as it preserves liquidity to cope with the coronavirus disease 2019 (COVID-19) pandemic.
In an e-mail to BusinessWorld on Wednesday, RFM Chief Financial Officer Enrique Oliver I. Rey-Matias said the company’s 2020 capex is more than three-fourths down from a year ago, when it spent more than P400 million.
“If last year [capex] was over P400 million, this year would be less than P100 million so far. Capex [is currently] put on hold,” he said.
In a statement to the exchange, RFM said it had “tightened on expenses and capex spending to conserve liquidity and maintain profitability in light of changing consumption patterns.”
The company’s revenues are only starting to pick up in the second quarter, after it suffered a 4% profit decline in the first three months of the year due to supply chain disruptions when Luzon was on a strict lockdown.
In the April-to-June period, RFM’s attributable net income increased 11% to P399 million, while revenues remained flat at P3.87 billion, based on its regulatory filing on Wednesday. Its gross expenses were also flat at P3.26 billion.
This brought profits up 5% to P611 million for the year-to-date, which Mr. Rey-Matias said is due to the recovery of its ice cream and bread businesses.
During RFM’s annual stockholders’ meeting on Wednesday, the CFO reported the company’s net sales improved 2% to P7.09 billion in the first half, largely due to the 18% sales growth of its pasta, milk, sauce and flour businesses.
“Sales for the second quarter of 2020 showed that the first-quarter slowdown in ice cream and institutional bread has seen some signs of reversal, and the strong demand for milk and pasta continued to be sustained,” Mr. Rey-Matias.
He noted the stay-at-home setup has left many customers buying RFM’s pasta, sauce and milk products to aid them in cooking their own meals from home.
“In terms of the 2020 outlook, RFM continues to be cautiously optimistic for the full year,” Mr. Matias said. “With the initial P7 billion in sales for the first half, and the estimated P611 million net income, we foresee that we will be continuing with this growth trend for the rest of the year.”
Aside from being in the “essentials” sector, RFM is also banking on the upcoming Christmas season as a driver for its sustained growth in the months ahead.
“I believe the coming months will be the strongest period where Filipinos will start buying for Christmas. That starts as early as September all the way to December,” RFM President and CEO Jose Ma. “Joey” A. Concepcion III said in the meeting.
Also on Wednesday, RFM’s board of directors approved a plan to add P500 million to its share buyback program, increasing the budget for the plan to P1.4 billion.
Shares in RFM at the stock exchange increased six centavos or 1.45% to close at P4.20 each at the end of trading.