RFM Corp. is banking on the upgrade of its flour mills to help it stay competitive in the market, as it continues to see rising prices of raw materials due to the weakening peso.
RFM Chief Financial Officer Enrique Oliver I. Rey-Matias said the capacity upgrade would improve competitiveness against other players, especially at a time when input costs are rising due to the weaker peso.
The listed ice cream and flour manufacturer earlier said it was investing P240 million to enhance the quality of flour it produces. RFM imports the wheat it uses to make flour from the United States, Australia, and Canada, among others.
“So essentially may (there are) ups and down sa (in the) price of raw material. Despite the ups and downs, price of flour is steady. Bottomline, there’s more supply to meet the growing demand. In that respect, you see more competition,” Mr. Rey-Matias told reporters after the company’s annual shareholders’ meeting in Mandaluyong last week.
“Kaya kami nag-upgrade ng flour (We upgraded our flour) so we can maintain our price and increase our volumes,” Mr. Matias said.
RFM’s share in the local market for flour is currently below 10%.
To offset the weaker performance of its flour business, RFM is focusing on strengthening its ice cream business, citing the potential to tap markets in the country, a large part of which remain underserved, Mr. Rey-Matias said.
“There’s a lot of people wanting to eat ice cream during a lot of occasions. What we’re doing is putting the ice cream freezer closer to the consumer,” he said.
RFM is one of the companies behind the Selecta ice cream brand, which was created through a joint venture partnership with global consumer goods giant Unilever.
Mr. Rey-Matias said RFM is deploying more ice cream freezers in sari-sari stores and local groceries to bring the Selecta brand closer to more Filipinos. In addition, it is also investing P1.1 billion to expand its current capacity for ice cream.
“Based on our estimation, this is enough to support the growth of our fast growing ice cream business over the next four years,” he said, noting that the demand for ice cream has been steadily growing in previous years, leading to the full utilization of most of its production lines.
Sales of Selecta ice cream jumped by 11% during the second quarter of 2018, which in turn supported a double-digit increase in the company’s revenues.
RFM recorded a 3% increase in net income attributable to equity holders of the parent to P525 million during the first six months of 2018, driven by an 11.6% jump in revenues to P6.31 billion.
For full year 2018, the company expects to sustain a double-digit growth in revenues and high-single digit increase in net income. — Arra B. Francia