Concepcion group-led RFM Corp. saw a 4 percent year-on-year decline in net profit amounting to P212 million in the first quarter as its ice cream, milk, pasta, institutional bread and flour businesses showed mixed results, especially after the whole of Luzon was locked down to curb the coronavirus pandemic.
Revenues for the three-month period went up by 3 percent year-on-year to P3.2 billion as sales were tempered by the Luzon-wide lockdown starting mid-March, RFM disclosed to the Philippine Stock Exchange on Wednesday.
“Prior to the lockdown, we saw strong growth across most units. However, the lockdown affected our ice cream sales, especially in the out-of-home segments as consumers were restricted to their homes. On the other hand, the stay-at-home situation shifted more buying to our Selecta Milk, Royal and Fiesta Pasta and sauces, as well as White King hotcakes, champorado and arroz caldo. Institutional bread and flour sales were hit by closures of fastfood outlets,” RFM Jose Ma. Concepcion III said.
The increased demand for RFM’s packaged pasta and milk also highlighted challenges in production and supply chain as well as in plant safety and health of workers under the enhanced community quarantine (ECQ), Concepcion said.
“Our manpower and delivery personnel were limited by the ECQ even as we housed some staff in our sites to ensure steady production of our food products,” he said.
For the second quarter, RFM expects sales and income outlook to be even more subdued than in 2019. “The limited mobility and spending power of consumers will bear down on the sales of ice cream and institutional sales to fastfood outlets even as milk and pasta will see sustained demand,” Concepcion said.
Nonetheless, Concepcion pointed out that RFM’s balance sheet remained strong as its parent company remained debt-free while cash hoard was at P3 billion.
Like many other businesses coping with the challenging environment at this time, RFM scaled back capital expenditure spending and reconfigured expenses to the “new normal.”
“RFM has paid 30 percent of its P1.2-billion 2019 net income last March, and despite the hit on income, there is still more than enough company liquidity and retained earnings to look forward to the second tranche dividends, albeit at a scaled down magnitude,” Concepcion said.
“We continue to observe and adapt to the new reality. The gradual opening of the economy balanced with measures to contain the virus is crucial to every company’s and entrepreneur’s long term survival. We would need to continue the collaboration of the private and public sectors in ensuring our workers have food on their table and have work to come back to when more economic activities are allowed. To this end, RFM will be part of the private sector effort to provide regular rapid testing to its manpower across its plant and office sites,” he stressed.
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