Ice cream sales expected to lift RFM’s second quarter

RFM Corp. expects its ice cream business to drive earnings in the second quarter, as consumers tried to beat the summer heat with the cold treats.

“It’s just like others, the first quarter was a little bit weak. But I think the second quarter will be improving, bulk is because of ice cream. Ice cream is doing very well,” RFM President and Chief Executive Officer Jose Maria A. Concepcion III said after the BusinessWorld Economic Forum in Bonifacio Global City last Friday.

RFM benefited from their strategy of providing owners and operators of

stores across the country with money and credit to sell ice cream, effectively making the Selecta Ice Cream brand more accessible to the Filipino market.

“The neighborhood store, which is the store, is closer to the market. The consumption of ice cream has increased because of stores,” Mr. Concepcion said during the forum.

“The growth of Selecta today is phenomenal. Its market share is 80%,” Mr. Concepcion said, noting that it has raised the bar for any newcomer in the ice cream industry since stores cannot accommodate more than one brand due to its small size.

Despite a “very high base” last year, RFM’s ice cream business posted an 11% growth in revenues for the first quarter of 2017. The company attributed the higher ice cream sales to the “intensive campaign in delivering more visibility, availability, affordability and innovations in Selecta Ice Cream across the country.”

However, this was not enough to offset the weak sales in RFM’s Fiesta and Royal pasta brands, which are seasonally weaker in the first quarter, the company said. RFM saw revenues fall 3% to P2.55 billion in the January to March period.

“Both Fiesta and Royal brands saw weaker sales as most pasta companies struggled to move out their Christmas season trade inventories during the quarter,” the company noted in its quarterly report.

This resulted to an 8% year-on-year decline in net income to P198.1 million for the January to March period, from the P216 million recorded in the same period in 2016.

“The third quarter and the fourth quarters are our stronger quarters. Our second quarter should be a lot better,” Mr. Concepcion said.

In its quarterly filing, RFM noted the positive impact of the savings from the lower cost of central warehousing will be felt in the second quarter.

“Initiatives to improve efficiency, selling and marketing budgets are ongoing, and are expected to enhance income for the coming months,” it added.

Incorporated in 1957, RFM currently has businesses in flour-based products, margarine, milk and juices, canned and processed meat, ice cream, and bottled mineral water. The firm also has non-food businesses such as barging services and leasing of commercial or office spaces.

Shares in RFM gained seven centavos or 1.46% to close at P4.85 apiece on Friday.