RFM Corp boosts net income last year

RFM Corp. substantially boosted its net income last year as it was able to realize additional cash from its asset disposals and listing proceeds, despite flat sales and the continued provisioning for its foreign exchange losses.

Based on unaudited financial statements submitted to the Securities and Exchange Commission (SEC), the consolidated net earnings of the Concepcion-controlled conglomerate reached P96 million, a whopping 583- percent jump from a mere P14- million net income in 1999.

The increase could be attributed mainly to the one-time gain from the P724- million proceeds of the listing of RFM’s semiconductor unit Psi Technologies at the tech-heavy Nasdaq market in the US, along with the sale of a 68-percent stake in Consumer Savings Bank for P400 million.

These were realized against the backdrop of flat net sales of P16.625 billion, just a notch higher than the P16.6- billion sales in 1999 as the economic slowdown dampened local consumer spending.

Earlier, RFM president and CEO Jose Concepcion III said their profitability would continue to move within a tight range as they prepare to "clean-up" their balance sheets.

"We’re taking more of the forex losses related mainly to our outstanding $65-million convertible bond issue in 1996," he said.

Due to the provisioning for premium accretion and unrealized forex losses from the five-year bonds estimated at about P126 million, RFM has continued to make adjustments in its net income for the past four years.

Concepcion said they have started the transition in their overall strategy to "refocus on our core food and beverage business, to strengthen fundamentals to weather the storms of adverse conditions, and to be in a position to achieve continuing growth into the 21st century."

RFM continues to draw much of its revenues from its branded products made by beverage maker Cosmos Bottling Corp., ice cream firm Selecta and food processor Swift Foods Inc. "Our goal is for the branded part of our total business to account for at least 60 percent of our revenues and operating income in the medium term," Concepcion said.

He said a second tier of strong brands, including White King flour-based products, Sunkist juice and Blue Bay canned tuna, is also being developed to broaden their competitive line-up in the consumer goods market.