RCL Foods moves closer to portfolio restructuring, separates poultry business

SOUTH AFRICA—Consumer company RCL Foods’ board of directors has approved a robust portfolio restructuring plan, spearheaded by the separate listing of its Rainbow Chicken Limited brand in Johannesburg’s stock exchange in a move meant to spur growth. 

RCL Foods revealed it is restructuring its brand portfolio to deliver more sustainable earnings. The decision was made after the company strategically reviewed its brand portfolio. 

This strategic review evaluated the performance of the consumer goods company’s brands in the past few years. Rainbow Chicken Limited is the strongest brand compared to the company’s other offerings. It is one of South Africa’s biggest poultry producers, processing more than 4 million chickens weekly. 

Revenues from the chicken business increased by 11% in the last two quarters of 2023 to ZAR7.29 billion (US$391.97 million). This strong performance, despite ravaging inflation, helped inform the separation decision. Earnings before tax and foreign exchange adjustment (EBITDA) were ZAR5.36 billion (US$287 million) for the same period because of improved agricultural performance, higher sales volumes, profit margins, and effective cost control measures. 

The strategic review was necessary after the company scaled up its FMCG wing through several acquisitions. The consumer goods company acquired Sunshine Bakery in July 2022 for an undisclosed amount. The FMCG company also revealed plans to make acquisitions in the pet food industry in 2023 after completing a ZAR 123 million (US$6.56 million) expansion of its pet food manufacturing plant.  

The acquisitions increased RCL Foods’ output and volumes and provided opportunities for product diversification. The Sunshine Bakery acquisition resulted in a 28% increase in the company’s bakery product output in the first year.  

The company acknowledged that separating its chicken business from other FMCG brands will help its growth by reducing reliance on the poultry wing. The separation will allow structured resource allocation and management of the company’s other FMCG brands.  

The board is of the view that the unbundling of Rainbow will enable both businesses to pursue their respective growth ambitions and investment theses in a focused manner and with improved alignment on capital allocation priorities,” RCL Foods’ board said in a statement. 

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industryHERE

Newer Post

Thumbnail for RCL Foods moves closer to portfolio restructuring, separates poultry business

Costco’s Q3 sales surged to $57.39B, up 9.1% from prior year

Older Post

Thumbnail for RCL Foods moves closer to portfolio restructuring, separates poultry business

Taco Bell teams up with Kellanova for Cheez-It snacks