RFM income flat as sales dip in H1

MANILA, Philippines - Higher raw material prices took its toll on the profitability of food and beverage company RFM Corp. in the first half, with its net income almost flat while sales finished lower.

RFM told the local bourse yesterday its net profit reached P508 million in the first six months, nearly the same level as in the same period last year.

Net sales dipped three percent to P5.6 billion from P5.8 billion last year.

“The P508 million net income was achieved despite elevated raw material prices especially in milk and the discontinuation of the Dole distributorship last June 2016. These headwinds weighed on the topline and bottomline of RFM for the six-month period,” the listed firm said.

RFM said Selecta Ice cream sales continued to post double digit growth which helped offset softer sales in flour and pasta during the period.

The firm said flour continued to be affected by the weaker selling prices of the product, while pasta sales were affected by the observed elevated trade inventories during the early part of the year that affected new sales.

Both the Fiesta and Royal brands saw weaker sales as most pasta companies competed to move out their Christmas season trade inventories during the period, it added.

RFM said its income was supported by the lower cost of warehousing during the second quarter as well as adjustments in operating, selling and marketing expenses.

“Top line growth is expected to rebound with planned marketing campaigns in key brands for the second half of the year,” RFM chief executive officer Joey Concepcion said.

“Backed by the strength of our balance sheet and recurring cashflows, RFM will continue the 50 percent cash dividend policy of its net income and the share buyback program,” Concepcion added.