EconomyEditor's PickRFM allots P1.2B to expand milk, growing segments

September 1, 2022

FOOD and beverage firm RFM Corp. approved a P1.2-billion capital expenditure (capex) budget to expand the production capacities of its milk segment and institutional businesses.

Jose Ma. A. Concepcion III, chief executive officer of RFM, said in a press release on Thursday that “this P1.2-billion capex approval is one of the biggest set of capex since the purchase of the Royal pasta brand in 2014.”

“[T]his capex is expected to support the double-digit growth of our Selecta Milk offerings as well as support the growing consumer and institutional businesses that are expected to double in five years,” he added.

The company’s board of directors also approved a cash dividend of P200 million or almost P0.06 per share.

“The investment into more production capacity for milk and other high growth segments will support RFM’s sales growth momentum even as there are uncertainties in the global economy at present,” Mr. Concepcion said.

He also said the company’s ice cream joint venture will be expanded to meet volume growth over the long term.

RFM is the maker of Selecta Milk, Royal, and Fiesta pasta and sauces and White King mixes, flour, and bread. It is also a 50% owner of the Unilever RFM Ice Cream joint venture that sells Selecta, Cornetto, and Magnum brands.

Mr. Concepcion said that on top of cash dividends, the company also plans to use its excess cash to fund the capex over the next 15 months.

The latest payout brings RFM’s total cash dividends to P854 million or 65% of the company’s net income last year, with a total of more than P0.25 apiece.

“This has a dividend yield of 6.5% at the P3.9 per share prevailing stock price,” the company said.

The record date of the cash dividends is on Sept. 15 while its payment date is on Oct. 11.

Revenues of the company climbed by 17.4% in the second quarter to P4.57 billion and by 17.1% in the first half to P8.47 billion, which the company attributed to its ice cream, milk, and institutional businesses.

Mr. Concepcion said that “our strategy of focusing on our core strengths and brands has yielded good topline and bottom line growth over the past years and we are deploying the extra cash that we have accumulated to further feed into that growth of our core growth drivers.”

RFM recorded an attributable net income of P355 million in the second quarter, down 3.5% from P368 million a year ago, but its first-half attributable profit of P687 million was just slightly lower than last year’s P688 million.

“We have been carefully passing on the cost of higher inputs and also tightening on expenses to manage our margins,” Mr. Concepcion said.

On the stock exchange on Thursday, RFM shares declined by P0.04 centavos or 1.03% to P3.85 apiece. — Justine Irish D. Tabile

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