RCL Foods reports US$1.08B in revenue amid exceptionally tough market conditions

SOUTH AFRICA – RCL Foods, a leading manufacturer of sugar, chicken, grain and animal feed in South Africa, has published its interim results for the six months ended December 31.

Revenue for the period increased by 17.6% year-on-year to R20.2 billion (US$1.08B), attributed to a  combination of higher pricing, to counter rising input costs, and higher volumes in the sugar and chicken business segments.

Consumer goods companies globally have increased prices to cope with surging costs for almost all raw materials, energy and packaging on account of Russia’s invasion of Ukraine as well as pandemic-related supply chain disruptions.

Though many consumers seem to accept the increased prices, the hikes have only partially offset the costs, squeezing companies’ margins.

RCL’s EBITDA declined by 8.9% to R1.18 billion (US$63.4M) as a consequence of exceptionally difficult trading conditions engineered by high input costs and additional energy costs as the country is grappling with an energy crisis, according to the statement.

Its headline earnings per share for the six-month period also fell to 56.4 cents.

“Focusing on the factors we can control in current conditions, we have sought to deliver a stable Rand profit and grow market share, while supporting cash-strapped consumers as far as possible, both through value innovations and responsibly-managed price increases.

In so doing, our concern has been to balance the need for margin protection with the pressure on consumers’ pockets,” says the CEO, Paul Cruickshank.

The company recently issued a profit warning on account of the persistent load shedding and the new results reflect a loss of R96 million (US$5.16M) driven by record levels of power outages which impacted production and added direct costs.

The specific success of the sugar business segment was driven by an increase in local market sales volumes, aided by strong industrial channel growth, and more favourable local and export pricing.

While the outlook for sugar is positive from a price and crop perspective, yields could be impacted if irrigation is reduced on account of load shedding.

RCL also disclosed that it is in the midst of strategic growth efforts in key categories within its value-added portfolio, despite the current difficult market conditions.

The company recently acquired Sunshine Bakery, a transaction that was finalised in February and scheduled to take effect on march 1^st.

This was a move to expand the company’s baking business unit’s position into the KwaZulu-Natal region.

“We have delivered a resilient set of results in an exceptionally tough market. We are committed to maintaining a relentless focus on the factors within our control to keep moving forward in line with our strategic growth agenda, guided by our unfolding Purpose And Sustainability journey,” Cruickshank commented regarding the release of their interim results.

For all the latest food industry news from Africa and the World, subscribe to our NEWSLETTER, follow us on Twitter and LinkedIn, like us on Facebook and subscribe to our YouTube channel.