RFM marks major turnaround

RFM Corp. expects a major turnaround in its business, from a net loss in 2004 to a net income last year, even as the company prepares to undertake this year a "streamlining" of its operations and a redefinition of its business model to cut costs, The STAR learned.

The food and beverage group absorbed in 2004 an asset-impairment charge of P556 million from its holdings of Swift Foods Inc. (SFI) preferred shares. This turned its operating income of P162 million to a net loss of P436 million for that year.

Company officials revealed that the company expects a growth in its operating income by around five percent. "Because we don’t have any major provisioning last year, we should post a net income for 2005," they said.

RFM has also undertaken several investments, including a P15-million modernization of its 48-year-old flour mill aimed at improving efficiency and extraction rate as well as an expansion of its ice cream business.

RFM president and chief executive officer Jose Concepcion III said the ice cream, flour, juice, and property businesses are doing well.

As for 2006, Concepcion revealed that they expect "to do better than last year."

"If the foreign exchange rate improves, we will improve our margins and even rollback the prices of our products. If the peso goes down by 10 percent, we can rollback by as much as five percent and we expect other businesses to do that as well," Concepcion, who also serves as presidential adviser for entrepreneurship, said.

RFM’s chief executive also disclosed that they have just reopened their Swift meat processing plant in Cabuyao, Laguna which has been on strike for four years now. Plans are to allow a third party to operate the meat plant and for RFM to lease it to them, Concepcion said.

He also explained that while Swift has technically been listed, not having been traded for sometime now, there are no plans to close the business. "It is also not for sale. We had plans five years ago, but we missed the chance," he said.

Concepcion pointed out that RFM’s focus right now is for its different brands to dominate in the respective businesses that they operate in.

Earlier, RFM reported that operating income more than doubled to P152 million for the first six months of 2005, from P73 million for the same period last year.

SFI is no longer under the portfolio of RFM after the latter in 2003, spun-off its poultry subsidiary for direct ownership of its shareholders.

The spin-off of SFI was done by way of a declaration of a property dividend to shareholders in the form of its shares in SFI, accounting for 96.44 percent of the publicly listed company. This move allowed RFM to focus on its branded food and beverage businesses, while allowing SFI to continue its poultry and agricultural development strategy with the full support of the RFM shareholders.