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RFM’s Cash Flow Turns Negative as Joey Concepcion Revs Up Growth Spending

 

Joey Concepcion has long preached the gospel of entrepreneurship to small businesses. In the first quarter, the RFM Corp. chief appeared to be applying the same playbook inside one of the Philippines’ better-known food companies: sell more, reinvest harder, and accept a little cash-flow discomfort along the way.

RFM’s first-quarter numbers had the look of a company leaning into growth. Revenue rose 10% to ₱4.97 billion, while net income climbed 10% to ₱341 million, helped by stronger operations and higher other income. The company said sales were driven by improved volumes across both its Consumer and Institutional segments, with the broader investor read being that volume gains were complemented by pricing actions in key product lines. 

But beneath the earnings growth was a more complicated cash-flow story. RFM generated ₱115 million in operating cash flow in the quarter, then spent ₱194 million on property, plant and equipment. On that basis, free cash flow swung negative by roughly ₱79 million — a small but notable reversal for a company often viewed by income investors as a steady dividend payer.

The spending marks a more entrepreneurial posture for Concepcion, RFM’s chairman, president and chief executive officer, who also serves as a prominent Philippine entrepreneurship advocate through Go Negosyo and related private-sector roles. The message from the numbers: RFM is not merely harvesting cash from mature brands; it is putting capital back into the business.

The risk is working capital. Inventories jumped to ₱3.05 billion at the end of March from ₱2.16 billion at year-end, a build-up of ₱889 million, or about 41%. Management said the increase was meant to support business operations, but for investors, it becomes the quarter’s key watch point: inventory has to convert into sales, not sit on the balance sheet. 

There were offsets. Receivables fell sharply to ₱1.92 billion from ₱3.08 billion, reflecting collections, and operating cash flow improved materially from the prior-year period, when the company used ₱548 million in operations. That suggests the negative free cash flow was less a sign of deteriorating collections and more the result of a deliberate build in stock and capacity.

RFM’s sales momentum was broad-based. The Consumer Business remained the core, posting ₱3.43 billion in external sales versus ₱3.18 billion a year earlier. The Institutional Business grew faster, with external sales rising to ₱1.53 billion from ₱1.33 billion, while operating income in that segment increased to ₱132 million from ₱107 million. 

Margins were resilient, though not spectacular. Gross margin improved to 34.8%, reflecting cost efficiency, while operating income rose 9.5% to ₱402 million and operating margin held at 8.1%. The drag came from expenses: general and administrative costs climbed to ₱433 million from ₱311 million, absorbing some of the benefit from higher sales.

For shareholders, the tension is clear. RFM paid ₱300 million in cash dividends during the quarter and declared another ₱300 million dividend in April, underscoring its commitment to returns. Yet the company’s own cash balance fell to ₱1.94 billion from ₱2.39 billion at the end of 2025, as cash was used for operations, capital expenditures, investments and dividends.

That makes the next few quarters important. If the inventory build reflects confidence in demand — more flour, pasta, milk, juice and ice cream moving through the system — then Q1’s negative free cash flow may look like the cost of preparing for growth. If inventory lingers, however, investors may start asking whether RFM’s entrepreneurial push is tying up too much cash.

For now, Concepcion’s RFM has delivered the headline investors want: higher sales, higher earnings, and another dividend. The footnote is that growth is no longer free. It is being financed through inventories, capex and cash — and the market will want proof that the spending translates into stronger volumes, pricing power and, eventually, cash flow.

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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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