RFG holdings realises marginal rise in full year profit, plans to consolidate operations

SOUTH AFRICA – South Africa-based producer of fresh, frozen and long-life convenience meal solutions, RFG holdings has reported an 8.3% increase in turnover to R5.9 billion (US$379.2m) for the year to end September, despite difficult trading conditions caused by the Covid-19 outbreak.

The group’s operating profit was consistent with the previous year at R392.0 million (US$25.19m) and the operating profit margin declined from 7.2% to 6.7%.

It’s profit after tax increased by 0.3% to R216.1 million (US$13.88m) with its Headline earnings being 3.2% higher at R226.7 million (US$14.57m).

The Western-Cape based food producer, which owns market leading brands such as Rhodes, Bull Brand, Magpie, Squish, Bisto, Hinds and Pakco, reported 6.6% rise in sales from its regional operations i.e. South Africa and sub-Saharan Africa.

The regional operating profit margin declined from 8.3% to 7.9% owing to an adverse change in sales mix, lower juice and pie volumes and Covid-19 related costs.

“The lockdown impacted key product categories and sales channels and resulted in higher costs, temporary factory closures and pressure on consumer spending.”

RFG holdings Chief Executive – Bruce Henderson

The groups International turnover increased by 15.5% owing mainly to the 14.8% depreciation in the Rand against the basket of trading currencies and improved canned fruit export volumes which increased by 12.6% for the second half compared to adecline of 11.5% in the first six months.

After reporting a loss for the first half, the international segment recovered to post a profit of R36.6 million (US$2.3m) for the year with the operating margin declining from 3.4% to 3.0%.

“The lockdown impacted key product categories and sales channels and resulted in higher costs, temporary factory closures and pressure on consumer spending,” Chief executive Bruce Henderson said.

Looking ahead, Henderson said that while Covid-19 would continue to impact the group into 2021, the outlook seems favourable with the backing of its broad range of product categories.

Capital expenditure of R250 million (US$16m) is planned for the new financial year, including the installation of the additional fruit juice line.

Also, the company is seeking to build a new warehouse at the fruit juice facility in Wellington, an additional filling line in the baby food factory at Groot Drakenstein and upgrade its bakery facility to accommodate the integration of the KZN operations.

The group plans to rationalise certain commercial operations as well as its KZN pies and pastries business (formerly Ma Baker).

The KZN pies and pastries operation will be closed at the end of November 2020 and consolidated into the Gauteng pie facility in Aeroton and the bakery products factory in Linbro Park.

This rationalisation is aimed to create production efficiencies and cost savings which will benefit the group in the current difficult trading conditions.

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