Food and beverage firm RFM Corp may report flat to single-digit growth in profit this year as inflationary pressures pose a risk to margins.
RFM chief executive officer Joey Concepcion said while the company’s first quarter net income showed a “decent four percent expansion over 2021 to P334 million, he expects margins to continue to be under pressure.”
“RFM’s outlook for 2022 is continued growth in topline and single digit growth to flattish income. If commodity prices reverse from their steep uptrend, then income could possibly trend higher in the second half of 2022,” he said.
Given rising inflation, the company would be more mindful about spending this year.
“We are finishing the capex we have already started and we are also reviewing other proposed capex in the meantime,” said Concepcion.
“Amid the inflationary situation in the economy today, RFM is trying to balance passing the commodity inflation thru managed price increases on one hand and absorbing the cost inflation on the other hand, because consumer spending power is constrained. We think if we pass on all the cost inflation, there will be demand destruction,” he said.
“The strong pricing power of our brands especially in ice cream is helping keep margins from declining drastically. Our Selecta Milk is also driving volume growth for RFM,” Concepcion added.
He said RFM’s balance sheet remains very strong with excellent liquidity.