RFM net income jumps 7-fold to P320 million in 5 months

MANILA, Philippines - RFM Corp., the food and beverage conglomerate of the Concepcion-Araneta family, reported a more than seven-fold jump in its net earnings in the first five months of the year on aggressive marketing activities and new product launches.

In its disclosure to the Philippine Stock Exchange yesterday, RFM said its net income from January to May 2010 reached P320.8 million. 

Given this strong performance, the conglomerate expects to exceed its P500-million net income target this year with net earnings for the first half of 2010 already seen at around P400 million.

Last year, RFM’s net profit amounted to P365 million or 49 percent higher than the year-earlier level. Net sales rose six percent to P7.97 billion from the P7.55 billion recorded in 2008.

RFM president and chief executive officer Joey Concepcion attributed the current year’s performance to robust sales results brought about by several product innovations.

 “From last year, the company has increased by 50 percent its investments in marketing to further build brand equity. Revenue growth, coupled with better-managed cost structures and operating efficiencies, have pushed up operating margins this year. We believe we have now arrived at a sustainable business model that will propel RFM to its next level of growth,” he said.

 “For instance, our Selecta ice cream, which is a joint venture with Unilever, posted a remarkable performance of over 50-percent sales growth, even over 100-percent growth in some product segments, for the first half of the year. This is quite unprecedented for a brand that is already the dominant market leader in ice cream at 59-percent market share. Selecta will become an increasingly important contributor to the topline and bottomline numbers of RFM, “ Concepcion added.

He also cited the significant market inroads being made by another RFM product, Fiesta spaghetti, which has become the top spaghetti brand in the country, on the strength of its value-for-money proposition to consumers. Concepcion also credited the major improvements achieved in the operating performance of its Selecta milk and Swift meat groups.

RFM’s board also approved yesterday a regular cash dividend policy allotting 30 percent of its recurring net income beginning this year for annual distribution to its shareholders.