RFM Posts P513 Million in Net Income for First Half of 1998

July 30, 1998 PSE CIRCULAR FOR BROKERS NO. 1774-98 RFM POSTS P513 MILLION IN NET INCOME FOR FIRST HALF OF 1998 Food and beverage giant RFM Corporation reported in a disclosure statement submitted to the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) that it posted P 513 million in net income for the first six months of the Year. This is a 13% increase from the P453 million the company posted during the same period last year. Consolidated net sales amounted to P 8.9 billion, which is also a 13% increase from P7.8 billion posted during the same semester last year. RFM officials attribute its good performance for the first six months to the resiliency of demand for its food and beverage products. RFM CEO Jose A. Concepcion III said that food and beverage demand remained strong for the first half of the year. "This validates our belief that our sector is the one of the best sectors to invest in during difficult times, since most consumers will trade down to items that serve basic needs and food and beverage products are among those items." Concepcion said. "We also think that the good performance of RFM also validates the effectiveness of our strategy of positioning our products and brands as strong value-for-money propositions when incomes are depressed and money is tight, you can count on Filipino consumers to stick with brands where they get the best value for their money, brands that offer very good quality at an affordable price." Concepcion added. Cosmos Bottling Corporation again led all other RFM subsidiaries in terms of income contribution, posting P283 million in net income, a 16% increase from its P244 million performance for the same semester last year. "Cosmos' competitive pricing of Pop Cola is serving consumers from the lower income groups well and its low cost operating structure allows the company to sustain its value-for-money strategy for as long as it wants to, which is in stark contrast to multinational bottlers who are forced now and then to increase prices because of higher cost structures or increasing concentrate costs." Concepcion explained. Selecta Dairy Products Inc. followed Cosmos as next biggest profit contributor of the RFM Group with P57 million in net income, up 8% from P53 million posted during the same semester last year. Selecta also posted net sales of P1,104 million, up 41% from P783 million last year. "Ice cream and juice demand was naturally strong during the first half of the year because of the warm weather, particularly in the second quarter. Also it was our introduction of the Ice Drop line, which shored up our Frozen Novelty volumes, since it is a refreshing product selling at a very affordable price. Our summer collection of new native ice cream flavors also received wide consumer acceptance." stated John Concepcion Selecta President and Chief Operating Officer. Swift Foods Inc. also performed relatively better as it posted a net income of P50 million for the second quarter. This is a substantial improvement from the P82 million net loss it reported during the first quarter of the year. Swift officials attribute this to the much-improved price of chicken especially during the second quarter of the year, as well as the company's determined efforts to reduce fixed overheads costs by a significant amount this year. "We merged, reorganized and right-sized our sales and distribution organization in order to efficiently boost the chicken and the meat businesses, which is a radical departure from having two specialized sales and distribution teams before." Concepcion said. "We also looked for local substitutes to imported feed ingredients in order to shield ourselves from the higher peso costs of imported Soya and fishmeal." Concepcion added. RFM is the second largest listed food and beverage conglomerate in the Philippines in terms of revenue. cd The company is celebrating its 40th year anniversary this year.