Manila port congestion snags RFM profit growth

MANILA, Philippines–Food conglomerate RFM Corp. grew its net profit last year by 10 percent to P863 million, riding on buoyant domestic consumption.

But RFM could have performed even better in 2014 if not for the port congestion in Manila, RFM president and chief executive officer Jose A. Concepcion III said in a statement.

Also, COL Financial head of research April Lee-Tan said RFM’s full-year net profit was below market estimates, accounting for 87 percent of full-year consensus forecast.

While the port congestion had been reduced, it still affected the timeliness of deliveries and the cost of raw materials and products. Operational costs also temporarily increased due to additional warehouses and higher trucking rates brought about by a shortage in providers, the company said.

The City of Manila implemented a total truck ban for seven months last year before bowing to public pressure to lift the ban in September.

RFM’s net profit of P863 million in 2014 was attained on the back of the 8-percent jump in sales revenues to P11.1 billion last year.

RFM said that growth particularly in the Fiesta and Royal pasta operations accelerated especially in the last two months of the year as logistics issues improved in time for the holidays, partially offsetting the impact of an unusual weather disturbance in December.

The company reported that almost all brands had exhibited faster growth, especially Selecta ice cream, Fiesta and Royal pasta, White King flour mixes, Selecta milk and the institutional bread businesses.

But despite the Manila port congestion, Concepcion added that RFM managed to find ways to improve the supply and distribution system that in turn sustained the growth momentum in sales and profits.

“Efforts will be focused on how we can further improve cost efficiencies but we hope the authorities immediately address the external supply chain constraints to bring back a better operating environment for the business sector,” he said.