RCL Foods half year earnings fall 26.3%, faults chicken and sugar imports

SOUTH AFRICA – South African packaged goods company, RCL Foods has said that headline earnings in the half year ended December decreased by 26.3% to US$33.4 million, attributed to pressure from increased sugar and chicken imports.

The firm has expressed concerns on dwindling operations as a result of increased importation of sugar and poultry products into the country.

The Johannesburg Stock Exchange (JSE) listed food producer has said that dumped imports have weighed heavily on its performance during the period.

“Chicken imports have grown by over 25% in the period, mainly from Brazil and America. Dumped imports remain a significant issue for, and component of, the local poultry market, representing over 25% of the market,” the company said.

Additionally, Miles Dally, chief finance officer at RCL has called for a more robust regulatory framework that will ensure that the country’s local and sugar and chicken business.

Dally said chicken and sugar producers continued to lobby for government protection through their respective industry bodies.

“Chicken producers in SA are as efficient as their overseas counterparts. The product that comes here is dumped.

The trading conditions in retail and wholesale have been really tough. The consumer remains under pressure,” Dally said.

This comes amid rising pressure from other companies with business in the sugar and poultry sector in the country over the “unregulated” imports that have continued to impact negatively on their performance.

According to the SA Poultry Association, Brazil was the main country of origin for SA poultry imports in December 2018, with 57.3 % or 21,637 tons, reports Business Report.

Additionally, Chris Logan of Opportune Investments in South Africa said that Brazilian chicken imports to SA had spiked after a number of countries, including those in the EU, blocked Brazilian products amid other concerns.

In international trade, dumping takes place when a country or company exports a product at a price that is lower in the foreign importing market than the price in the exporter’s domestic market.

During the six months ended December 31st, RCL’s headline earnings dropped 26.3% to US$33.59 million, which it pinned to oversupply in the local market and posted revenues growth by 3.5% to US$940 million.

The group, whose brands include Rainbow, Simply Chicken, Nola, Selati and Sunbake, produces about 700 000 tonnes of sugar annually and is 78% controlled by investment company – Remgro Limited.