CONCEPCION-led food and beverage company RFM Corp. is set to wipe out its long-term debt, taking advantage of an expanded cash flow to boost its balance sheet.
In a disclosure to the Philippine Stock Exchange on Wednesday, RFM said it was set to retire P252 million debt ahead of maturity this week. This followed RFM’s settlement of P280 million worth of long-term debt last May.
“The stronger income performance in the first half of the year, plus faster collection of accounts receivables shored-up the cash flows, which allowed us to settle earlier our long-term loans. This will bring down long-term debt to zero, making RFM long term loan debt-free. If we factor in the short term loans, debt to equity ratio is only 5 percent,” RFM president and chief executive officer Jose Concepcion III said in a press statement.
In the first six months, RFM’s net income increased by 11 percent year-on-year to P472 million. At the operating profit level, RFM posted P665 million in six-month income, up by 17 percent year-on-year.
“The income and cash flow grew faster as we sold more of the higher margin products and achieved better efficiencies with more managed warehousing costs,” Concepcion said.
RFM does not expect to spend on big capital outlays moving forward, having just recently expanded its plant capacities. For instance, its pasta plant had been expanded to accommodate the higher production requirements of the newly-acquired pasta brand Royal.
The company is now gearing up for a stronger growth momentum in the second half as it heads towards the peak months of September to December. The run-up to the 2016 presidential election is also seen driving higher consumption like in previous election periods.