Food firm expects to hit P1-B profit

CONCEPCION-LED food and beverage group RFM Group. expects to breach the P1-billion net profit milestone this year as strong consumer spending is seen supporting a double-digit growth in sales.

The goal is to end this year with record net profit of P1.1 billion from a P908.4-million bottomline posted in 2015.  This is seen supported by a 10-12 percent growth in sales.

“So far, our first quarter looks pretty good. We’re trending toward a 20-percent growth in income which is trending toward the P1.1 billion target for the year,” RFM president and chief executive officer Jose Concepcion III said in a recent interview with the Inquirer.

The first quarter was especially good for the ice cream business under the Selecta brand, Concepcion said.

The ice cream business under Unilever Selecta Ice Cream Inc., a joint venture with Unilever, now accounts for 32 percent or the single biggest component of RFM’s total business.

The pasta group accounts for 25 percent, while the flour business has a share of 24 percent.  The commissary business—which refers to the manufacturing of bread for food retailers like McDonald’s and 7-Eleven—accounts for 10 percent of total business. The remaining 9 percent represents the beverage business, covering milk and juice business.

The projected topline growth of 10-12 percent is seen slower than the expansion in net profit as the commodity-based business—flour production—is more challenging than the branded consumer businesses.

The ice cream under Selecta is seen to lead the expansion in the branded consumer business with a projected growth of 20 to 30 percent growth.

Ramon Lopez, vice president and head of corporate planning, said Selecta had been focusing on expanding the overall market and increasing the frequency of consumption per head.  As such, the brand is not just working to increase its own market share but the industry size as well.

“As the market leader with almost 80 percent of the market, that’s how you derive growth rather than getting (additional market share from) the competition,” Lopez said.

RFM’s strategy for Selecta is to expand  market share by offering products that will encourage frequency in consumption, such as rolling out affordable products in small sticks and cones priced at P10 to P20, Lopez explained.  Frozen delight Cornetto is an example of such product.

The Selecta brand was founded by the Arce family in 1948 and sold to RFM in 1989.  RFM operated it as a solo venture for 10 years. Global consumer giant Unilever came in as a partner in 1999. Doris Dumlao-Abadilla