RFM sees flat growth

With consumers still holding back on their spending, food and beverage conglomerate RFM Corp. expects its net income to grow within a tight range this year, its president and chief executive officer Jose Concepcion III said yesterday.

Although there are signs of a strong recovery in the first quarter, Concepcion told reporters during the company's stockholders meeting that the year 2000 will be a "clean-up year" since "we're taking more of the forex losses related mainly to our outstanding $65-million convertible bond issue in 1996."

Due to the provisioning for premium accretion and unrealized forex losses from the five-year bonds estimated at about P126 million, RFM has made adjustments in its net income for the past three years. Last year, its bottom line earnings slumped as it reached only P14 million since the company's operating income alone had already declined nine percent from P1.195 billion in 1998 to P1.083 billion due to higher expenses for marketing and brand-building.

"Basically, 1999 was the first year of transition in our overall strategy to refocus on our core food and beverage business, to strengthen their fundamentals to weather the storms of adverse conditions, and to be in a position to achieve continuing growth into the 21st century," Concepcion said.

The company has programmed to spend about P1.8 billion this year for the expansion of its core businesses and brand building, more than the P1.2 billion in capital expenditures last year.

"Our income will grow out right now, we'd rather not make an estimate because we still have to see what will happen within six months. We may have some one-time gain down the road, on top of the proceeds from Psi Technologies," Concepcion said.

The recent successful listing on the Nasdaq market of RFM's semiconductor unit Psi Technologies last March is expected to result in a substantial P724 million gain for the parent firm.

Another potential income contributor is the planned sale of Consumer Savings Bank, a thrift bank 68 percent owned by RFM, within 60 days. Concepcion said the sale, which is being handled by the US investment bank Chase Manhattan, has attracted about 15 interested buyers.

RFM continues to draw much of its revenues from its branded products made by beverage maker Cosmos Bottling Corp., ice cream firm Selecta and food processor Swift Foods Inc. "Our goal is for the branded part of our total business to account for at least 60 percent of our revenues and operating income in the medium term," Concepcion said.

He said a second tier of strong brands, including White King flour-based products, Sunkist juice and Blue Bay canned tuna, is also being developed to broaden our competitive line-up in the consumer goods market. --