Rhodes Food Group’s grows annual turnover by 8.5% to US$364.5m

SOUTH AFRICA – The Rhodes Food Group, South Africa’s leading manufacturer of canned fruit, jams and canned meat, upped its operating profit by 24.9% to R392.2m (US$26.4m) and headline earnings by 38% for the year 2019.

The company, whose brands include Rhodes, Bull Brand, Magpie, Squish, Bisto, Hinds and Pakco supplies customers and consumers across South Africa, Sub-Saharan Africa and in major global markets.

Total group turnover increased by 8.5% to R5.4bn (US$364.5m) while turnover in the regional segment, which includes SA and the rest of Africa, increased by 8.4% and accounted for 80% of total turnover.

In comparison to the previous years, this is the first time the segment has reported single digits growth since the group listed in Johannesburg Stock Exchange in 2014.

In 2016 financial year RFG’s regional turnover grew by 43.4%. In 2017 it rose by 21.4% and 2018 by 11.9% indicating a dwindling trend in the turnovers. From 2014-2018 the RFG’s regional compound annual growth rate (CAGR) was 20.2%.

International turnover increased by 8.8%, assisted by the 7.7% depreciation of the rand against group’s major trading currencies.

Sales of long-life foods increased by 9.2% amid 4.3%. Good growth was reported in fruit juice, dry foods and canned meat, with baked beans being the fastest growing category.

Fresh foods increased sales by 7.3% with ready meals proving resilient in the consumer downturn and the pie category stable in a highly competitive market.

The protein snack food business acquired from RCL Foods was successfully integrated into RFG’s Western Cape ready meals plant with the new business contributing sales of R33 million (US$2.2m) in the six months since acquisition.

The business produces protein snacks including meat balls and chipolata sausages for Woolworths.

The group’s chief executive officer, Bruce Henderson, said in a statement that the results benefited from “robust regional sales, the early signs of recovery in the international business and expanding margins”.

Management priorities for the year ahead include improving the balance sheet by generating stronger cash flows to reduce debt levels, a continued focus on working capital management and containing costs in the constrained consumer environment, the company said.

The company is planning capital investment of R150m (US$10.1m) for the 2020 financial year, including R24m (US$1.6m) for the capitalisation cost of pineapple crops in Eswatini.

Projects include the installation of additional fire prevention equipment in manufacturing plants, equipment replacement in the ready meals factories and equipment upgrades in the fruit products facility in Tulbagh, the statement read.

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