Swift's Net Income Surges by 420% in First Nine Months of 1999 While Cosmos Posts Growth Amidst Industry Slump

November 17, 1999 PSE CIRCULAR FOR BROKERS NO. 2935-99 16 November 1999 Swift's Net Income Surges by 420% in First Nine Months of 1999 While Cosmos Posts Growth Amidst Industry Slump Swift Foods, Inc. (SFI) registered a 420% jump in its net income after tax to P147 million during the first nine months of 1999 from a net loss of P46 million during the same period last year due to higher operating income and lower financing charges. The company's net sales increased by 11% to P6.37 billion from P5.75 billion on back of higher chicken prices lower and a 13% growth in processed meat volumes, which grow because of the successful launch of the improved Swift Mighty Meaty hotdog, better penetration of the wet market accounts, and the good performance of new regional brands . The company's operating income jumped by 21% to P163 million from P135 million during the same period last year as cost of major materials including feed ingredients like corn, soya meal, and imported beef for processed meat products continued to go down. This despite a 171% rise in marketing expenses as of September 1999 versus last year. cdll Cosmos Bottling Corp., beverage subsidiary of food giant RFM Corporation, registered a modest 2% growth in sales volume for the first nine months of 1999 compared to the same period last year. This was achieved despite a reported double-digit decline in total softdrink volumes versus the same period last year according to a report the company disclosed to analysts yesterday. The September sales volume level was the highest achieved by Cosmos after the summer months. As a result of higher sales volume coupled with higher selling price, the company achieved a 14% increase in net sales which reached P2.9 billion for the January to September 1999 period from P2.6 billion a year ago. However, higher sugar prices coupled with increased marketing expenses which grew by 77% year-on-year contributed to lower operating income as the company continued building the image and popularity of the Pop Cola and Sarsi brands. As a result of this investment in the brand, the net income after tax reached P358 million, down by 15% compared to the same period last year despite slight decrease in financing charges. "We attribute this good performance to heavier advertising spending behind the Pop Cola brand, whose image and awareness levels have improved considerably over the past two years that we have been airing our ad campaigns." Concepcion added. Cosmos parent company RFM Corporation on the other hand, reported a 4% improvement in its consolidated sales amounting to P12.9 billion. LibLex "RFM continues to grow despite the delayed effects of the Asian Crisis on consumption and business growth." Concepcion reported. RFM's total marketing expenditures nearly doubled for the first nine months of the year, as it grew from P140 million last year, to about P243 million this year. As a result, Income from operations slightly went down by 7% to P770 million for the first three quarters of the year. Despite the good performance of Swift and the non-food businesses, RFM's consolidated recurring Net Income After Tax, declined from P242 million last year, to P129 million for the first nine months of this year, as RFM recognized lower income from the discontinued operations of the ice cream business of Selecta, higher minority interest with the spin-off of the said business, and higher financing charges. cdlex RFM's balance sheet however, gained strength from a recent infusion of P1.625 billion into the business by new financial partner WP Argosy Limited. "This infusion arms RFM with resources to make strategic food and beverage acquisitions. We made a bid recently for a major bottled water company but we came in second behind a very aggressive bid by another conglomerate. Despite this, we will be aggressive in exploring opportunities in water, juice and powdered beverages" Concepcion said. llcd