The underlying story of RFM’s 9M 2025: Strong Margins, Weak Cash Flow

As the third quarter of 2025 closed, RFM Corporation stood firm in its role as a staple in the Philippine food industry. The company’s top line barely moved—net revenues edged up by just 1% to ₱5.45 billion, signaling a market that remains steady but competitive. Yet beneath this modest growth lay a story of operational discipline and strategic focus.

Margins told the real tale. Despite flat sales, EBITDA surged to ₱830 million, lifting the margin to 15.2%, while net income climbed 3% to ₱480 million. How? RFM tightened its belt where it mattered: selling and marketing expenses dropped, and general administrative costs were kept lean. The result was a healthier operating margin of 11.2%, proving that efficiency—not just volume—can drive profitability.

The Consumer segment emerged as the hero. Though its sales slipped slightly, its operating income jumped 24%, powered by better mix and pricing strategies. Meanwhile, the Institutional segment faced margin pressure despite higher sales, reminding management that cost dynamics in flour and bread remain a challenge.

Year-to-date, the picture brightened further: revenues up 1.8%, net income up 12%, and EPS at ₱0.37. Shareholders were rewarded handsomely with ₱1 billion in declared dividends, reinforcing RFM’s reputation for consistent returns.

But the quarter wasn’t without clouds. Operating cash flow plunged to just ₱141 million, a stark contrast to last year’s ₱1.3 billion. Inventories ballooned by over ₱1 billion, and payables shrank, squeezing liquidity. Cash reserves fell by ₱1.13 billion, though the balance sheet stayed strong with a current ratio of 1.36x and net cash of ₱1.1 billion after bank loans.

Looking ahead, the company faces a delicate balancing act: sustaining consumer-driven margin gains while restoring cash flow discipline. Inventory normalization and working capital management will be critical in Q4. Still, with low leverage, robust equity, and a proven ability to protect profitability, RFM enters the final stretch of 2025 with resilience—and a clear mandate to turn efficiency into cash.

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