On the surface, RFM still looks like the sort of company income investors are meant to love. In 2025, the group lifted revenue to ₱22.33 billion, up 3% from 2024, while operating income rose 8% to about ₱1.89 billion, net income climbed 14% to ₱1.62 billion, and EBITDA improved to about ₱2.69 billion. Liquidity also appeared comfortable, with the current ratio improving to 1.32x from 1.27x. At the parent-company level—the level that matters most for dividend declarations—sales rose to ₱15.23 billion, while net income increased to ₱1.75 billion and earnings per share improved to ₱0.52 from ₱0.46.
Yet the 2025 annual report also contains the detail that makes the title’s dilemma real rather than rhetorical: cash generation weakened materially in 2025. On a consolidated basis, net cash from operations fell to about ₱1.94 billion from ₱3.35 billion in 2024. At the parent-company level, the deterioration was even more striking: net cash from operating activities fell to roughly ₱749 million in 2025 from ₱2.25 billion in 2024, even as the parent declared ₱1.5 billion in dividends. That gap matters because dividends are funded by cash, not just by reported earnings, and in 2025, the parent’s distributions were not fully covered by operating cash flow alone.
RFM is not in immediate financial trouble; far from it. The parent company still ended 2025 with about ₱1.56 billion in cash and cash equivalents and around ₱3.74 billion in financial assets at FVOCI, while retained earnings stood at roughly ₱6.85 billion. At the consolidated level, retained earnings were around ₱7.01 billion, with unrestricted retained earnings for dividends cited at roughly ₱6.17 billion in one annual report summary. The balance sheet still offers room to maneuver. But that room is precisely what makes the allocation question harder: RFM can afford to keep paying well, yet it also still has plausible, even necessary, uses for capital.
Those uses are visible throughout the report. RFM’s capex bill may have eased from the heaviest expansion phase, but it remains real. Consolidated capex in 2025 was still roughly ₱644 million to ₱708 million, depending on the reporting cut used in the annual-report summaries, and management continues to point to ongoing manufacturing and logistics investments. The company had already committed ₱1.1 billion to a new bread-buns plant that began commercial operations in July 2024, after earlier investments of ₱436 million and ₱445 million to expand milk processing and packaging. Even in 2025, projects included a retrofit pasta control system, bundling machines, and milk-line conversion work. This is not the spending profile of a business that has finished building.
Nor is this reinvestment optional in the easy sense. RFM remains exposed to cost volatility because much of its raw material base is imported. The annual report highlights dependence on wheat, dairy ingredients, tomato paste, and other imported inputs, alongside explicit exposure to foreign exchange risk. Management notes that price volatility in raw materials remains a live operating issue, even if 2025 did not produce a catastrophic hit. For a food manufacturer, especially one operating in price-sensitive categories, margin stability depends not only on scale and brand but also on supply-chain resilience, procurement discipline, and the ability to respond when imported costs move abruptly.
Then there is competitive pressure, which is less visible in the income statement than in the strategic narrative. RFM’s own disclosures frame the market as one in which new products, re-launches, and lower-priced competitive offers can quickly pressure market share and margins. The risk is not simply that rivals discount; it is that consumers shift between brands, pack sizes, and formats with little loyalty when value is under strain. That, in turn, forces RFM to keep spending on advertising, trade support, placement, visibility, and innovation—costs that are easy to underappreciate when looking only at dividend capacity.
The need for technological upkeep adds another layer to the dilemma. RFM acknowledges that its flour-milling assets are older than some competitors’ more modern equipment, and the report describes an ongoing effort to upgrade machinery, improve efficiency, and modernize facilities. Recent and historical projects include blending systems, packing-and-weighing upgrades, pasta-line expansions, milk-line improvements, sauce-line additions, and plant modernization. In consumer staples, ageing equipment is not just an engineering issue; it is a capital-allocation issue. A board that over-distributes may flatter shareholders for a year or two, only to impose a bigger bill later in the form of catch-up capex or lost operating efficiency.
And RFM cannot simply retreat into its legacy brands and hope time does the rest. The annual report makes clear that the company sees new products as essential to growth and relevance. In 2025, management highlighted Royal Pasta Kits, Royal Pinoy-Style Carbonara, continued rollout of Fiesta Creamy Carbonara, and fresh initiatives in the milk portfolio, such as Selecta Creamy Latte. Those launches are not cosmetic. They reflect an effort to expand beyond traditional “celebration” occasions, reach younger consumers, and defend categories where private-label pressure, changing tastes, and channel fragmentation can erode incumbents. But innovation has a cost: research and development, packaging changes, trial marketing, promotions, channel support, and inventory risk all consume capital long before success becomes visible in earnings.
There are also more concentrated operating realities than the group-level numbers may suggest. The company says it is not dependent on any single customer in a way that would materially impair the business as a whole, but it also discloses that buns supplied to McDonald’s accounted for about 76% of bakery-division sales in 2025. That is not a balance-sheet emergency. It is, however, the sort of customer concentration that makes it hard to skimp on investment in quality, uptime, process control, and logistics reliability. When a meaningful revenue stream depends on execution rather than brand nostalgia, reinvestment becomes an operating necessity rather than a discretionary luxury.
To be sure, dividends are not unsupported by the business. The parent still receives meaningful cash support from its investment holdings, booking around ₱646 million in dividend income from subsidiaries, joint ventures, and an associate in 2025, plus ₱167 million in interest income. That helps explain why the board has been able to sustain generous payouts despite weaker operating cash flow in the year. But it also means dividend sustainability depends partly on upstream remittances and investment income, not only on the core operating cash conversion of RFM’s own manufacturing businesses. A payout policy supported by such buffers may be safe; it is not necessarily proof that higher payouts are the best use of the next peso.
That is the crux of Joey Con’s dilemma. On one side lies the market logic of a mature staples company: steady profits, ample retained earnings, good liquidity, and a shareholder base that has come to expect cash. On the other hand, lies the industrial logic of RFM’s actual businesses: cash generation weakened in 2025, capex needs remain real, and the company still faces cost volatility, competitive pressure, technological upkeep, and the constant need for new products to keep brands relevant. The danger is not that RFM must choose between generosity and survival. It is that too much generosity today may slowly compromise the earning power that justifies generosity tomorrow.
For now, RFM can plausibly do both. The balance sheet still provides cushions; the company remains profitable; and the board has not yet been forced into a stark trade-off. But the 2025 annual report suggests that the era of effortless simultaneity may be fading. If operating cash flow does not recover meaningfully, or if another heavy investment cycle arrives, the case for letting dividend growth outrun business reinvestment will look harder to defend. In that sense, the title is not merely a framing device. It is the strategic question RFM is already beginning to answer.
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Disclaimer: This is for informational purposes and is not investment advice. Figures are taken from company disclosures and exchange data; valuation ratios include the author’s calculations based on cited inputs.
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