SOUTH AFRICA – South Africa’s largest processor and marketer of chicken, Rainbow Chicken Processing Plant and Hatchery (RCL Foods), is set to invest US$34.3m in its Hammarsdale plant, west of Durban, to restore the plant to full capacity.
RCL Foods is a fully integrated broiler producer that breeds and rears its livestock which it feeds from its own feed mills, processes, distributes, and markets fresh, frozen, value-added, and further-processed chicken.
The company announced the investment during the South African Investment Conference at the Sandton Convention Center in Johannesburg.
“The overall objective is to return the plant to full capacity, increasing output by 60% over a one-year timeframe. This will increase local chicken supply and drive economies of scale while providing much-needed additional employment,” the company stated.
“The Hammarsdale Rainbow Chicken Processing Plant and Hatchery supply mostly KwaZulu-Natal across all channels. This expansion is expected to create jobs, as we will be reinstating the second shift at the Hammarsdale processing facility.”
The US$34.3m investment comprised a combination of RCL Foods’ investment into its own Rainbow Chicken Processing plant and Hatchery and a third-party investment by contract growers to increase the supply of chicken in the facility, it explained.
Last month, the South African chicken processor revealed a 21.8% slide in profit attributable to equity holders of the company to US$28.20m while operating profit was down 20.7% at US$35.65m.
RCL forecasts growth following the resilient set of results for the six months to December 2022. This was despite the difficult conditions characterized by high input prices, unprecedented levels of load shedding, and rising living costs for consumers.
Earnings before interests and taxes, depreciation, amortization, and impairments declined by 8.9% to US$64.83m due to the challenging trading conditions, despite revenue for the six months to December 2022 increasing 17.6% to US$1.11 billion versus December 2021.
Volumes have remained relatively stable across most categories, with several grocery brands growing their market share, as indicated in the report.
A strong focus on both strategic and operational execution has assisted the Group to maintain its forward momentum, despite the impact of continued commodity input cost increases, the economic and social fallout of the COVID-19 lockdowns, the unrest in KwaZulu-Natal and Gauteng in July 2021, and the floods in KwaZulu-Natal and parts of the Eastern Cape in April 2022.
Against this backdrop, the Chicken business has done well to return to profitability as it works to lay the foundation for a sustainable future.