RFM triples capital spending program

MANILA, Philippines - Food and beverage firm RFM Corp. has tripled its capital budget to P1 billion this year to expand its pasta, ice cream and bread production facilities.

The expansion program will allow the company to feed the continuous growth in consumer spending, its top executives said yesterday.

RFM has allotted P1 billion for its capital expenditures this year, way higher than the P350 million in 2012.

“It is for investments in the pasta business, the new plant for the macaroni line,” Felicisimo M. Nacino Jr., executive vice-president and chief operating officer of RFM, told reporters.

This will also cover the expansion of the ice cream distribution infrastructure, as well as projects in bread-making operations.

Nacino said RFM is also moving its milk and juice plant to Cabuyao, Laguna.

“We have to sustain our leadership in cost-efficiencies and productivities to be able to strengthen RFM brands’ long-term value-for-money proposition to Filipino consumers,” said RFM president and CEO Jose A. Concepcion III.

In the first quarter, RFM’s profits rose 18 percent to P153.7 million despite sales falling eight percent to P2.2 billion due to the disposal of its meat business late last year.

Nacino said RFM is sticking to a 20-percent profit growth guidance for the whole year while sales is seen to pick up seven to eight percent.

In the first five months, earnings were already 30 percent higher from a year ago, Nacino said, adding that the company’s bottom line will benefit from the expansion program.

RFM is a market leader in several brands. For instance, Selecta, a joint venture with Anglo-Dutch consumer goods giant Unilever, already corners 76 percent of the local ice cream market.

It’s White King Fiesta pasta business holds a 28-percent market share.

Moving forward, RFM is preparing for opportunities to acquire food and beverage brands or entire companies.

The company earlier sold its two-hectare Manggahan property in Pasig for P300 million and its one-hectare Sto. Tomas lot in Batangas for P60 million.

“We are building up our cash reserves. Since we let go of the meat business, we have to look for something that generates much revenues,” Nacino said.

In October, RFM sold its Swift meat business brand to a unit of Century Canning Corp. of the Po family for P800 to 850 million.

The acquisition will also be supported by bank loans, Nacino said, adding that RFM has a good track record in paying debts.

RFM also owns Sunkist beverage, Selecta milk and White King cake mixes. It also distributes Dole and Marca Piña.