Swift debt cut by 50% to P600 million by yearend

MANILA, Philippines - Swift Foods Inc., the poultry unit of Concepcion-owned food and beverage conglomerate RFM Corp., expects to reduce its debt by half at the end of the year.

From P1.2 billion at the end of 2008, the company’s debt is expected to go down to just P600 million by yearend and will be reduced further to P300 million in 2010, according to Swift president Bernie Concepcion.

Concepcion said the reduction of debt, mostly owed to suppliers, will be made through the sale of non-performing assets like real estate properties, streamlining of operations and employee downsizing.

“There are still more assets to sell and banks are cooperating and accepting some of our assets as payment for our debt,” Concepcion said on the sidelines of Swift’s annual stockholders meeting.

Concepcion said the company is also bent on cutting further its operating expenses to a more manageable level.  From P150 million last year, the company is planning to limit operating expenses to P120 million this year and reduce it further at a faster rate in 2010 to just P50 million.

The global economic turmoil which started in 2008 has hobbled Swift’s ability to pay its debt obligations, forcing it to enter into a debt-for-asset swap with its suppliers and creditor-banks.

Concepcion said the company has also reduced its manpower to just 50 from 300 to stay afloat. Swift likewise closed down some of branches which were inefficient in growing chickens.

He said Swift would still end in the red this year even as it is expected to post positive operating results in the fourth quarter this year.  He said demand for chicken is expected to grow during the Christmas season.

For next year, Concepcion said the company expects the poultry sector to grow single-digit due to the anticipated increased consumer spending during the May 2010 elections.

To take advantage of the expected strong demand for poultry products, Swift is allotting P40 million for the installation of two big facilities that can house a total 40,000 chickens.

The company has completed its right-sizing strategy and currently 90 percent of the company’s chicken is grown through its own company facilities under climate controlled conditions.

Operational excellence at the broiler and breeder farm is at the forefront of its strategic intent to grow in a very challenging industry.

Concepcion said Swift has transformed itself into a highly efficient poultry producer achieving best in the world farm performance, allowing it to sustain its growth intentions in the immediate future.