RFM income soars 72% in first 9 months

Despite a third quarter loss, RFM Corp. managed to preserve its earnings streak for the year with a substantial 72 percent jump in net income to P188 million in the first nine months, company officials said.

RFM president and CEO Jose Concepcion III attributed the profit surge to higher gross margins on its products, improving by as much as 33 percent mainly due to a better sales mix and improvement in selling prices of chicken, flour and processed meats that covered for increasing costs.

He added tighter management of operating expenses that focused on sustained marketing efforts to build brand equity, particularly the Cosmos softdrink brands like Pop Cola and Sarsi, led to a more than tripling of operating income to P959 million, from P316 million the past year.

The food and beverage conglomerate generated P12.2 billion in revenues during the period, a modest two percent gain from last year. Beverage firm Cosmos Bottling Corp. paced the group with a 21.2 percent gain in sales volume amid a reported downtrend in the softdrink industry.

Meanwhile, its food arm Swift Foods Inc. contributed only P15 million in total earnings during the period. With the sale of Cosmos, RFM is readying to put up SFI at the auction block next as expressions of interest continue to pour in.

"The Swift meat business is currently undergoing restructuring to improve operating efficiencies amidst a weaker market," Concepcion said.

He said RFM is expected to use some of the proceeds from the P14-billion Cosmos sale to pay down its debts and declare a reasonable level of cash dividend. "It intends to keep a cash reserve to finance its future growth, either through organic expansion of existing businesses or through acquisition," Concepcion added.

Last year, RFM managed to boost its net earnings almost seven times to P96 million, from P14 million in 1999, as it was able to generate additional cash from the sale of assets as well as proceeds from the listing of semiconductor affiliate Psi Technologies at the US Nasdaq counter.

The Psi listing generated a one-time gain of P724 million while another P400 million was generated from the sale of RFM’s 68-percent stake in Consumer Savings Bank.

Last May, however, RFM disposed off its remaining 34-percent stake in Psi and followed it up with the sale of its 83.2-percent interest in Cosmos to the San Miguel/Coca Cola group.

He said it is RFM’s intention to develop these businesses with particular emphasis on "branded" and value added products such as Selecta milk drinks and ice cream, Sunkist juice drinks, Swift’s chicken and meat products, White King flour and cake mixes, Fiesta pasta, Butterfresh margarine and others.