SOUTH AFRICA – RCL Foods, a leading South African food manufacturer producing a wide range of branded and private label products has achieved a pleasing set of results for the year ended June 2022, demonstrating resilience in a challenging operating environment.
During the period under review, the JSE-listed food manufacturer reported a 10.2% rise in revenue to R34.9 billion (US$2.02 billion) and EBITDA improved by 7.7% to R2.595 billion (US$150m), driven by continued momentum in Sugar, a return to profitability in the Chicken business and a solid performance in Vector Logistics.
Its Headline earnings were up by 10% to R1.05 billion (US$60.9m) this period, while headline earnings per share (Heps) increased by 9.9% to 118.6 cents.
“The group’s strong focus on both strategic and operational execution has assisted in maintaining its forward momentum, despite the impact of continued commodity input cost increases as well as the economic and social fallout of Covid-19, the social unrest which broke out in KwaZulu-Natal and Gauteng in July 2021, and the KwaZulu-Natal floods in April 2022,” the group said.
RCL Foods, which owns several well-known food brands, including Nola Mayonnaise, Ouma, Selati, Simply Chicken, Yum-Yum peanut butter and 5-Star maize meal, says that it has tried to limit price increases to protect the price-burdened consumer.
“As a major food producer, we are acutely aware of the significant pressure on South Africans at this time and have sought to limit price increases as far as possible,” CEO Paul Cruickshank says.
“We have driven efficiency and prioritised innovation in the value tier to provide cash-strapped consumers with affordable options in key categories.”
Sugar continues to perform
According to reports by Money Web, the group’s value-added business – which consists of the groceries, bakery and sugar units – reported steady growth, largely supported by the sustained growth momentum of the sugar business.
According to the group, the sugar business reported its second highest profit ever this period, aided by improved mill recoveries and efficiencies, as well as maintained local demand amid reduced industry supply.
The sugar unit, the star performer of the segment, reported a 7.2% increase in revenue this period to R9 billion (US$521.9m), up from R8.29 billion (US$480m) in the previous year.
Overall, the value-added segment of the business reported a 7.4% rise on revenue to R21.22 billion (US$1.23 billion) this period, a rise the group says was supported by “steady volumes and responsibly applied price increases that largely offset higher input costs.”
The value-added segment is set for future growth as the consumer goods maker recently expanded its baked goods portfolio with acquisition of Sunshine Bakery, one of the country’s largest independent baking businesses.
Bread volumes in the RCL Foods network are expected to increase by 28% as a result of the transaction.
Rainbow’s performance
Meanwhile, its chicken business, Rainbow, reported pleasing results this period despite having to battle rising commodity input costs, an Avian Influenza (AI) outbreak as well as the 2021 July unrests and devastating KwaZulu-Natal floods earlier this year.
The business which is currently undergoing a separation process that will see it existing as a subsidiary of the group, reported a 10% rise in revenue this period to R11. 38 billion (US$80m).
Rainbow’s underlying Ebitda grew significantly from R111 million last period to R348.6 million (US$20.2m) in the period under review.
“Improvements in pricing and agricultural results, procurement gains and buoyant quick service restaurant (QSR) sales helped to offset the cost impacts of commodity price increases and AI mitigation measures,” the group said.
However, the group did warn that government’s recent decision to halt the suspension of the implementation of anti-dumping duties for the next year will not bode well for local poultry producers and could potentially offset the gains it has seen in its Rainbow business thus far.
“The minister attributes the suspension of the implementation of the anti-dumping duties to rising food costs, and the potential impact on poultry prices.”
“However, the impact that the delay will have on poultry remains questionable as importers merely use the opportunity to profit on dumped imports. No evidence exists that dumped chicken is sold by the importers at a low price to the consumer,” the group said.
Its Vector Logistics continued its turnaround with a pleasing improvement in revenue by 17.1% and EBITDA performance, driven by the completion of the ICL network integration and a recovery in the food service industry, with volumes returning to almost pre-COVID-19 levels.
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