RFM to prepay loan after 2012 earnings surge 34 pct
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MANILA - RFM Corp will pay off its long-term debt in advance after earnings grew by more than a third last year to surpass the food and beverage manufacturer's profit guidance.
In a disclosure to the Philippine Stock Exchange, the Concepcion-led company said it will prepay about P1 billion in long-term loans, citing stronger cash flow from its business units and proceeds from the P850 million sale of its Swift meat business to the Century Pacific group of the Po family.
This, after RFM reported its net income rose 34 percent to P682 million in 2012, a reversal of the 19-percent contraction to P508 million in 2011 and topping the P600-million profit target set for last year.
Jose A. Concepcion III, RFM chief executive officer, attributed the higher earnings to stronger sales of higher margin businesses, with its topline improving 11 percent year-on-year to P11.1 billion last year.
"The lower commodity input costs…for milk, wheat and sugar were also important in keeping the cost levels down, as well as better yields due to scale economies as we reach higher volumes in our key brands, such as Selecta ice cream and Fiesta spaghetti," Concepcion said.
The positive economic environment also boosted consumer confidence and fuelled spending, resulting in the growth across all RFM brands in the ice cream, pasta, sauce mixes and beverage segments.
RFM expects to sustain in 2013 the momentum of last year's growth amid the favorable macroeconomic environment, election-related spending and expectations of a credit rating upgrade.
InterAksyon.com earlier reported the company intends to hike its net income by 15-20 percent from last year.
"It will be a more exciting year for Selecta and Fiesta as we introduce more product innovations and build up brand equity," Concepcion said.
Aside from organic expansion, RFM plans to embark on acquisitions and enter into strategic partnerships to accelerate growth.
Last year, RFM partnered with Engrain, a leading US flour research and development company, for the development and marketing of flour-related enhancers and the improvement of the quality and cost-performance of flour products.
It also inked a major distributorship agreement with global packaged pineapple and fruits leader Dole.
To support its growth, RFM had said it will set aside a group-wide capital expenditure budget of P700 million, which may bankroll capacity expansion in the latter part of the year.