SOUTH AFRICA – Recently listed Rhodes Food Group has benefited from strong trading for the year to end September 28 2014 in its regional and international businesses, with offshore sales helping to stem the effects of a weak rand.

“The business has proven resilient in the current constrained consumer environment,” the company said.

Revenue for the period lifted 31.5% to R2.4bn, with turnover benefiting from the 13% depreciation in the value of the rand against the group’s basket of trading currencies. Export sales accounted for 35% of revenue for the year.

Operating costs, meanwhile, grew by 10.7%, and were affected by the inclusion of the Bull Brand business.

The operating margin improved from 8.6% to 9.7%. The higher margin, together with the growth in revenue, contributed to a 47.9% or R76.4m increase in operating profit to R236.1m.

Normalised headline earnings per share increased by 40.5% to 36.8c.

With a history dating back to its founding by Cecil Rhodes as Rhodes Fruit Farms in 1902, the food group has an extensive product line-up, which includes jams and vegetables (Rhodes and Hazeldene brands), pies and sausage rolls (Magpie brand) and cheese (Portobello brand).

A strong position in the retail private-label sector has also been built, not least as Woolworths’ exclusive supplier of ready-made meals and pies.

Looking ahead, the group wants to continue to capitalise on the strength of its brands and long-term customer relationships to drive organic growth and grow market share.

“This will be supported by further expansion into sub-Saharan Africa. Bull Brand is expected to increase its revenue and profit contribution as the benefits of integration into the group’s operations and the upgrading of facilities become evident,” said the company.

Selective acquisition opportunities of other food producers that were aligned to the group’s core products would be pursued, it said.

But as 35% of its revenue is generated through exports, managing the volatility of the rand is “a perennial challenge”.

The group will maintain its hedging policy to limit the effect of currency fluctuations on earnings.

Capital expenditure of R129m is planned for 2015 for the continuing investment in capacity expansion and the upgrading of production facilities aimed at improving margins.

The directors plan to declare the first dividend for the financial year to September 2015, payable early in 2016, based on a dividend cover ratio of three times diluted headline earnings per share.

November 26, 2014;