PSE Circular for Brokers No. 130-98

February 13, 1998 PSE CIRCULAR FOR BROKERS NO. 130-98 February 12, 1998 NEWS RELEASE RFM CORPORATION FEBRUARY 12, 1998 Ref: B.J. Sebastian Tel: No. 6345609 Fax: 6320839 SELECTA POSTS RECORD PROFITS While most Philippine corporates are posting unexpected losses for the year just passed, Selecta Dairy Products Inc. (SDPI), the dairy subsidiary of food giant RFM Corporation, disclosed yesterday that it registered P176 million in pre-tax profits for 1997, 112% higher than the previous year, and the highest ever in its corporate history. Sales hit an all-time high of P1.9 billion for the said year, 30% higher than revenues posted in 1996, on the back of a 14% growth in ice cream sales volume. "Selecta has now come into its own as the leader in Philippine ice cream" said Jose A. Concepcion III, RFM President and Selecta Chairman and Chief Executive Officer. "As it enters into new dairy categories over the next few years, leveraging on its successful track record in leading edge manufacturing and brand building, we believe that Selecta will soon become a force to contend with as well, in the bigger dairy products segment of the country", Concepcion added. Despite the currency crisis that sent the cost of most imported inputs soaring in the second half of the year, Selecta still managed to improve its profit margins by 23% mostly through its continuing efforts to reduce waste and improve efficiencies from a number of well-timed productivity improvement investments, as well as its success in consistently growing its volumes faster than industry. John Concepcion, SDPI President and Chief Operating Officer said that Selecta's decision to invest heavily in improving their manufacturing competencies and logistics management, proved to be its single most important move over the last two years. "This has become even more important viewed in the light of what is now gripping the country's economy. With cash and credit getting tighter, our investments in systems that now help us move our products from the plant to the customers and then to our consumers is the most efficient way possible, is now enhancing our profitability and financial health more than ever", Conception said. When the peso depreciated sharply against the US dollar in July, most analysts feared the worse on the milk cost of Selecta. However, because of the substantial drop in the international price of skimmed milk powder, the landed peso cost of milk was still lower than the previous year. It was earlier reported that according to an independent survey, Selecta is now the market leader in the bulk ice cream segment of the market because of its continuing success in marketing a premium quality product to a wider base of consumer across the country. Selecta's introduction of new Hershey chocolate-based flavor collections also served to shore up what many thought would be flagging demand for bulk ice cream. The successful introduction of its Ice Buko line of coconut-based frozen novelties is another reason behind its continuing strong growth. Inspired by the locally popular "ice drop" that many Filipino consumers grew up with, Selecta developed "Ice Buko" into a refreshing, hygienic and high quality item with tasty flavor executions. Its newly established distributorship of Hershey confectionery products here in the Philippines also contributed positively to Selecta's bottomline. Selecta Dairy Products Inc. is 80% owned by RFM Corporation. The company was organized around the acquisition of the Selecta trademark by RFM in 1990. After four years of unprecedented sales and market share growth in the early 90's, Selecta was listed in the Philippine Stock Exchange in 1994. Since then it has remained one of the more stable performing consumer counters in the local bourse.