RFM profit drops 27% to P100M in first quarter

MANILA, Philippines - Food and beverage conglomerate RFM Corp reported a 27-percent drop in first quarter earnings this year due to a slowdown in sales amid a difficult environment, the company’s top official said.

RFM’s profit slid to P100 million in January to March this year compared with P137.6 million the previous year-period, said Jose Concepcion III, president and chief executive officer.

He said rising commodity prices like wheat, sugar and milk, as well as power and utilities cost squeezed margins.

The company has been tempering the price increases so as not to burden further the consumers and at least keep consumption levels. This is where past months’ efforts to improve cost structures and operating efficiencies have become useful in partially absorbing the cost shocks, Concepcion added.

Topline sales managed a minimal one percent growth, hitting P1.98 billion as against P1.96 billion a year earlier.

Concepcion attributed a general softening of the market in many categories as the country’s consumer confidence fell during the first quarter due to rising oil and food prices and the political concerns in the Middle East and North Africa.

Reports on consumer confidence showed a decline to minus 23.1 percent in the first quarter, from minus 8.5 percent in the fourth quarter of last year due to expectation of increasing interest and inflation rates and rising commodity prices.

Concepcion mentioned that sales were also affected by the pre-booking of stocks by the distributors in the previous months in anticipation of price increases. The delayed start of summer also slowed down the consumption patterns, but these segments still registered growth due to product innovations, backed by new marketing campaigns, especially in Selecta ice cream, Fiesta pasta, Selecta milk, the new Sunkist Litro and Swift Corned Beef Swak pack.

RFM is optimistic in the coming months as it focuses and leverages on the strengths of its core products. Selecta Ice Cream, a joint venture with global consumer goods giant Unilever, is further strengthening its hold in the market with its dominant share of 66 percent, while the flour-based businesses led by White King Fiesta continues to improve its market position at 29 percent in the spaghetti pasta category, Concepcion said.