SOUTH AFRICA – RCL Foods, SA’s largest chicken producer, said on Thursday its full-year profit probably fell as much as 80% after it wrote down $48m in its milling business and the country’s worst drought in more than a century hurt its sugar and poultry units.
Earnings per share were in the range of 20c to 30c in the year ended June 30 from 99c a year earlier, the Durban-based company said on Thursday. The results will be released on August 30.
RCL said sugar and chicken business units had been adversely affected by the worst drought in Southern Africa in the past 100 years.
“Chicken results have also been adversely impacted by the massively oversupplied poultry market as a result of surplus domestic volumes as well as record levels of dumped imports.”
SA had the least rainfall in 2015 since records started in 1904, damaging crops and herds and raising food prices.
Its farmers will need as much as R16.6bn in the year through March to subsidise feed purchases, a study by the farmers’ lobby Agri SA and others showed.
The milling unit recorded lower forecast cash flows in the period, resulting in a R642.8m impairment on goodwill and trademarks that reduced earnings by 75c a share, RCL said.
Profit was boosted by the release of a R163.3m provision for uncertain tax disputes as part of the producer’s purchase of New Foodcorp and the recognition of profit from options to sell shares in its Zambian hatching operation.
The share price fell as much as 6%, the most in more than a month, and was 5.3% lower at R14.20 in early afternoon trade on the JSE, giving the company a market value of R13.3bn.
The company, formerly known as Rainbow Chicken, has since 2013 sought to move into sugar and other food products by acquisitions to reduce its reliance on meat.