Food and beverage company RFM Corporation has started implementing its P1.2 Billion capex program that centers on capacity expansion and line-efficiencies to be able to serve the growing demand for its products.

RFM President and CEO Jose A. Concepcion III said that “the company is prioritizing its expansion activities to support our revenue targets with better cost structures and operating efficiencies. This will allow us to further increase our operating margins this year, sustaining a more profitable business model that will give RFM even better cashflows in the years to come”.

Concepcion added that "Given the growth in demand that we are seeing, our capex for next year will likely be at a similar level of P1 billion and up."

RFM earlier disclosed that it has already posted a net income of P 395 million for the first six months of the year, higher by 193% from the net income for the same period last year. Concepcion said that “this income level for the first six months is well on its way to surpassing the company’s full-year 2010 target of P480 million”.

The income came from a net sales of P 4.2 billion, or 10.2% growth for the first half of the year. Concepcion attributed the remarkable performance to the stream of successful product innovations in their branded businesses, backed by aggressive marketing campaigns.

“As we introduced our innovations, it became necessary to support them with big marketing campaigns to increase awareness while at the same time further build brand equity. We have intensified our marketing spending behind the brands and strengthened further our sales and distribution structure, to complete the support system.”

RFM reported that its ice cream brand Selecta, which is a joint venture with Unilever, posted over 50% sales growth that pulled-up the entire ice cream market category growth to 30%. This led to a more dominant market leadership position of 68%, while competitors declined to 20 % and 7 % market shares, as of May 2010.

Another RFM product, Fiesta spaghetti, also performed well as it became the No. 1 spaghetti brand in the country, on the strength of its value-for-money proposition to consumers. Concepcion also credited the major improvements achieved in the operating performance of its Selecta milk and Swift meat groups.

RFM also recently disclosed that its Board of Directors has approved a regular cash dividend policy, allotting 30% of its recurring net income beginning 2010 for annual distribution to its shareholders.

“While RFM has given cash dividends in recent years, such as the P50 million declared for each of this year and last year, we wanted to send a clearer signal to our shareholders and investors that will allow them to evaluate better their investment returns,” Concepcion said.