RFM income surges to P5.93-B on Cosmos sale

Buoyed by a hefty gain from the sale of Cosmos Bottling Corp., profits of the Concepcion-controlled RFM Corp. surged to P5.93 billion in the first months from only P188 million in the same period last year.

On Jan. 3, 2002, the Concepcion family sold its entire stake in Cosmos to San Miguel Corp. for P14 billion. A portion of the proceeds was used by RFM to retire debts and finance P2 billion in cash dividends for shareholders.

The continued weakness in consumer spending, however, affected RFM’s revenues for January to September this year as consolidated net sales dropped to P5.66 billion from P7.4 billion the previous year.

Given the current difficulties afflicting the poultry industry, RFM realized a loss from operations amounting to P568 million from an operating income of P60 million in 2001.

While operating expenses rose slightly to P935 million from P932 million, RFM’s financing charges declined by 83 percent mainly due to lower debt position.

The sale of Cosmos strengthened RFM's financial position as shown in the improvement of the company's September 2002 debt to equity ratio to .71 times from 2.15 times in December 2001.

As of Sept. 30 this year, the company’s total assets reached P11.9 billion or a decrease of 18 percent from the P14.5 billion reported in 2001 due to the sale of the Cosmos business.

For the third quarter alone, RFM widened its losses to P183 million from P59 million as its net sales decreased to P1.97 billion from P2.3 billion.

RFM, however, is confident that its remaining food and beverage brands will propel the company to new height through effective and aggressive selling and distribution network.

The company launched a series of aggressive marketing campaign, especially during the second half of the year in order to enhance the brand equity of its White king cake mixes, Fiesta spaghetti, Sunkist juice drink. Selecta Moo chocolate drink, and Swift meat products.

RFM said capital expenditure will be minimal this year as there is sufficient production capacity to meet the foreseen demand in the market.

Last September, RFM introduced to the market Saucy Mi canton and Nooda crunch products in joint venture with Uni-President Enterprises of Taiwan.

After selling its major cash cow, RFM is now focusing its efforts on strengthening its branded food products through strategic partnerships with foreign or local firms.

The company intends to focus on the food business under subsidiaries RFM Foods Inc., Swift, and Selecta Dairy Products Inc. RFM objectives are to recreate food products to exceed customer expectations and tap the international market to boost its profitability.

On the chicken business, relocation plans for its production facilities in Northern Mindanao and Northern Luzon are in full swing and improvement in production cost will be expected once completed in 2003.

Of RFM’s subsidiaries, Swift and Selecta are considered to be the "next-best" businesses of the Concepcion-led group since the other firms are all suffering from the slowdown in their respective markets.

Swift – engaged in the manufacturing and trading of poultry and meat products – controls some 21 percent of the dressed chicken market, second only to San Miguel, which controls 33 percent.

It sells products like dressed chicken, choice cuts, processed chilled meat, canned meat, and feeds under brand names Swift, Rica, Goldstock, and Blue Ribbon.

Ice cream unit Selecta is also seen by analysts as another future revenue-generating units.

To boost sales, RFM is considering outsourcing its operations even to China if it could offer lower costs.

Other businesses, RFM group include franchising and realty development. RFM owns the Little Ceasar Pizza, Sunroast and Dairy Queen franchises. The group, through subsidiary Philtown Property Development Co., constructed the luxurious One Mckinley high-rise building. – Zinnia dela Pena