RFM reports decline in profits

MANILA, Philippines—Food and beverage company RFM Corp. posted a 19-percent decline in net profits in 2011 as higher cost of goods gnawed at earnings early in the year but full-year results still exceeded expectations.

In a disclosure to the Philippine Stock Exchange, RFM said net income, including minority interest, last year amounted to P503.8 million versus a comparative bottomline of about P625 million in 2010.

The full-year 2011 results, however, surpassed market analysts’ yearend estimate of P420 to P430 million as financial results in the second semester improved from the more difficult first semester, RFM said in a press statement.

RFM president Jose Concepcion III said that despite inflationary fears and more rains last year that normally dampen demand, the company did relatively well with sales growth.

“We believe that stronger brand equity and product innovations have influenced the shift in buying pattern and frequency in a number of categories,” he said.

Higher revenues and the easing of commodity cost inputs such as milk and sugar in the second half, coupled with internal production improvements improved profitability to P291 million in the second half of 2011, up by 37 percent from its first-half income.

Sales registered a faster growth of 10 percent for the second semester, accelerating from the  7-percent growth in the first half, ending the year with P9.9 billion sales in revenue or 8 percent higher compared to a year ago.

“The focus on core food and beverage businesses is paying off”, Concepcion said.

“Selecta Ice Cream, a joint venture with world giant Unilever, is increasing its leadership of the industry with market share going beyond 71 percent, coming from around 66 percent at the start of 2011. Remarkable growth was seen in Selecta-Hersheys, Supreme, Classic and Cornetto lines, with innovations backed by strong marketing campaigns,” he said.

Concepcion added that flour-based businesses led by White King Fiesta spaghetti likewise continued to hit record sales levels, nearing a 50 percent growth and hitting rated capacity starting September. This  pushed up its recent market share in its biggest key account to 35 percent by yearend from 28 percent at the start of last year, Concepcion added.

RFM also reported good results on sales of Selecta milk, White King Champorado and Arroz-Caldo mixes, Sunkist litro pack and Swift Mighty Meaty and Corned Beef Swak as the company rationalized and focused its brand portfolio, supported by product repackaging, aggressive merchandising and trade-related programs.