RFM turns around with P4-M net income in Q1

RFM Corp., the food and beverage concern of the Concepcion family, made a significant turnaround in its financial performance during the first quarter of the year with a net profit of P4 million as against losses of P30 million in the previous year-period.

RFM executive vice-president and chief operating officer Felicisimo Nacino Jr. attributed the improvement in the company’s financial performance to cost-cutting measures implemented by management, improving margins in the branded food business, as well as higher contributions from the flour business.

Based on financial statements filed with securities regulators, RFM registered a six percent growth in net sales to P1.4 billion from P1.32 billion. Operating income increased seven-fold to P49 million from only P7 million the same period a year earlier.

"We’re just trying to start the year right, by sustaining the turn around in operations that we began middle of last year," Nacino said.

RFM president and chief executive officer Jose A. Concepcion III, for his part, noted "the impressive gains in building the company’s milk and juice business in 2004, and the increasing market dominance of the Selecta ice cream business." He said more work will still have to be done in the company’s other business units, such as the meat business.

Last year, RFM incurred a net loss of P436 million, 4.17 percent lower than the P455 million loss recorded in 2003. This was due largely to a one-time asset impairment charge of P556 million in 2004 that the company decided to take on its investment in preferred shares of Swift Foods Inc. (SFI) in compliance with new international accounting standards (IAS).

SFI, an integrated chicken producer which used to be a subsidiary of RFM, incurred losses in 2004 as the poultry industry continued to suffer in the wake of the bird-flu scare and the influx of chicken imports.

RFM’s net sales for 2004 remained flat at P5.85 billion as against P5.75 billion as the company reviewed and reconfigured its multiple product lines in a bid to lower production costs and discontinue marginal products.

RFM reported an operating income from continuing operations of P162 million for 2004, a full turn around from its operating loss of P646 million in 2003.

For this year, RFM will continue to focus on building up its branded foods business. Brands under the RFM umbrella include Sunkist Juice, Selecta Milk, Swift processed meat, White King Flour, and Fiesta Spaghetti.