SOUTH AFRICA – Rhodes Food Group (RFG), South Africa-based producer of fresh, frozen and long-life convenience meal solutions has reported an almost double-digit rise in revenue of 9.6% to R2.9 billion (US$160.9m) for the half year ended March.
The company, whose brands include Rhodes, Bull Brand, Magpie, Squish, Bisto, Hinds and Pakco supplies customers and consumers across South Africa, Sub-Saharan Africa and in major global markets.
The company has been able to continue operating throughout the lockdown imposed in South Africa from March 27 to curb the spread of the coronavirus, as it is deemed an essential service to ensure on-going food supply.
It acknowledged that consumer spending came under extreme pressure as the economy suffered the effects of the pandemic, but Rhodes Food’s broad range of product categories was providing a degree of resilience.
Turnover in the regional segment (South Africa and the rest of Africa) increased by 11.5% and benefited from strong sales in March following the state of disaster being declared in the country and ahead of the introduction of the national lockdown. Sales for March were 22.2% higher than the previous year.
The regional operating profit increased by 21.1% as the operating margin improved from 7.6% to 8.3%, lifted by the growth in the Fresh Foods segment.
Long Life Foods increased turnover by 12.6% (6.3% volume growth) with growth in fruit juices and baked beans and particularly strong sales in canned fruit, vegetables and meat in March before the start of the lockdown.
Fresh Foods sales increased by 9.6%, with volume growth of 4.7% and acquisitive growth of 3.2%. The ready meals and pie categories continued to be the main drivers of sales growth.
International division was severely impacted by the slowdown in exports of canned fruit to China from early January following the outbreak of Covid-19.
Limited shipments were made to China in the first quarter of 2020 and exports were further impacted by constraints at the Cape Town port in March, contributing to a decline of 11.5% in international volumes.
The sudden and rapid devaluation of the Rand had a significant impact on the profitability of the international segment, with net unrealised losses amounting to R48.8 million (US$2.7m) on the mark-to-market revaluation of forward exchange contracts for the period.
This contributed to the international segment posting a loss for the first half of R44.0 million (US$2.4m) relative to a profit of R3.7 million (US$205,000) in the prior period.
Owing to the anticipated negative impact of Covid-19 on the economy and the increased risk to the business, management is focusing on cash preservation through tighter cost management and by reviewing all non-critical expenditure, including capital investment.
“Measures being undertaken include maximising exports to improve cash flow and the closure of factories where necessary. Increasing working capital efficiency and reducing debt levels remain priorities,” it added.