RFM earnings rise in Q3 on strong sales

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Selecta ice cream

RFM CORP. grew its attributable profit by 10% during the third quarter of 2018, as the strong sales of its ice cream, pasta, milk, and flour managed to offset the higher prices of raw materials during the period.

In a regulatory filing posted after trading hours on Friday, the listed firm reported a net income attributable to the parent of P232 million from July to September, higher than the P210 million posted in the same period a year ago. The uptick followed a 10% rise in net revenues to P3.49 billion during the quarter.

This pushed RFM’s attributable profit to P757 million for the nine months ending September, 5.43% higher year-on-year, driven by an 11.21% increase in revenues to P9.8 billion for the period. Earnings before interest, taxes, depreciation, and amortization (EBITDA) meanwhile rose by 8.57% to P1.37 billion.

The nine-month performance translates to an earnings per share of 2.17 centavos, higher than last year’s 2.06 centavos.

The Concepcion-led company attributed the higher sales to its flagship brands: Selecta for ice cream and milk, Fiesta and Royal for pasta, and White King for mixes. It noted that the combined sales from the three brands improved by 11% during the nine-month period, while institutional sales of flour and buns went up by eight percent.

RFM’s other products include Sunkist Orange Pulp and Vitwater.

“The strong topline growth was able to offset largely the impact of higher raw material costs and softening prices of flour,” RFM President and Chief Executive Officer Jose Ma. A. Concepcion III said in the filing.

RFM’s flour business has been affected by the weakening peso, as it imports the wheat it uses to make flour from the United States, Canada, and Australia, among others. The company said last July that it is investing P240 million to enhance the quality of flour it produces to offset further price pressures.

The food and beverage firm is also strengthening its ice cream business, investing P1.1 billion to expand its current capacity. The investment is expected to support the growing demand for more ice cream over the next four years.

It is also deploying more freezers in sari-sari stores and local groceries to bring the Selecta brand closer to more Filipinos.

Given RFM’s nine-month performance, Mr. Concepcion said they expect to achieve double-digit growth in terms of revenues for full-year 2018, while net income could grow by single digit. The company is banking on the start of the midterm election period, as well as the boost in sales during the Christmas holiday.

Incorporated in 1957, RFM also engages in non-food businesses, including barging services and leasing of commercial or office spaces for its operating divisions.

Shares in RFM were unchanged at P4.79 each at the stock exchange on Friday. — Arra B. Francia