RFM sees another banner year

MANILA, Philippines - Publicly-listed food and beverage firm RFM Corp. expects another banner year in 2014, driven by strong demand enjoyed by its ice cream and pasta businesses.

Profits are seen to hit more than P900 million with the help of stable cost of raw materials and weaker peso that increases consumer spending, a senior company official said.

“I think it would be at least sustaining that same level of growth,” Felicisimo M. Nacino Jr., executive vice-president and chief operating officer of RFM, said in a phone interview yesterday.

He said the company targets to grow its earnings by another 15 to 20 percent this year after breaching the P800-million income mark in 2013.

“Fourth quarter was better than the previous quarters and I think it basically signals the recovery of the market,” Nacino said.

The maker of Selecta ice cream and Fiesta pasta posted a 19-percent profit growth to P525 million in January to September last year from P441 million a year ago, well within the target of 15 to 20-percent gain.

In 2012, RFM’s income surged a third to P682 million from P508 million in 2011.

For this year, RFM will post higher sales, aided by increasing consumer demand and manageable prices of raw materials.

“What we are focusing on is to drive sales growth considering 2013 topline was lower than 2012 because we disposed of the meat business,” Nacino said.

Its revenues fell nine percent to P7.1 billion in the nine-month period from P7.8 billion in 2012 as it unloaded its meat business to the Century Pacific group.

Nacino said the ice cream and pasta lines, both market leaders, will drive growth this year.

Selecta, a joint venture with Anglo-Dutch consumer goods giant Unilever, already corners 74 percent of the local ice cream market. RFM’s White King Fiesta division that includes its fast-growing pasta business holds more than 31 percent of the market.

External developments will also benefit the food and beverage maker this year.

“For raw materials, 2013 was a fairly good year especially for imported commodities. Based on our current reading, it looks like it will be the same situation in 2014,” Nacino said.

While weaker peso will slightly increase the cost of imported raw materials, RFM can manage and offset it given more efficient production and distribution, Nacino said.

But RFM will likely benefit from higher disposable income of families of Filipinos overseas, Nacino said.

A weak peso, while making imports costlier, also jacks up the value of dollar export earnings and remittances from overseas Filipinos when converted into local money.

In October, RFM sold 340 million shares at P4.77 apiece, allowing the firm to generate P1.62 billion from the private placement.

Proceeds from the top-up share sale prepares the listed firm for potential acquisition and expansion opportunities in the food business.