South Africa’s RFG Holdings weathers COVID-19 storm reporting 46% rise in earnings

SOUTH AFRICA – RFG Holding, South Africa-based producer of fresh, frozen and long-life convenience meal solutions, has reported a double-digit growth in earnings in the six months to end March, despite the impact of Covid-19 on its operations.

The food producer has reported a 46.4% increase in headline earnings to R119 million (US$8.53m) and headline earnings per share has gone up by 46.2% to 45.6 cents a share.


The owner of market-leading brands Rhodes, Bull Brand, Magpie, Squish, Bisto, Hinds and Pakco, increased operating profit by 14.9% to R185 million (US$13.26m).

The group’s operating profit margin, excluding once-off restructuring and impairment costs of R31.7 million (US$2.27m), increased by 210 basis points to 7.6%.

However, its turnover declined by 3.4% to R2.8 billion (US$200m) owing to the impact of the Covid-19 restrictions on fruit juice and pies, two of the group’s largest product categories.

Revenue was also impacted by slower international sales owing to shipping and logistics challenges.


Chief executive officer Bruce Henderson said the group delivered a pleasing operating performance with continued strong cash flows in the constrained consumer environment.

“While the results were impacted by lower sales in key categories and once-off costs, the group benefited from net foreign exchange gains of R19.6 million (US$1.4m),” he said.

International segment took the most hit

Turnover in the regional segment, which includes South Africa and the rest of Africa, was 1.7% lower, reflecting the impact of the additional Covid-19 restrictions imposed during the second wave of the pandemic over the festive season.

The dry foods category performed well following the successful relaunch of the Hinds spices range. This growth was offset by the slowdown in fruit juice sales owing to restrictions on entertainment and leisure activities during the summer holiday season.


Sales into the rest of Africa grew by a strong 11.1%, driven mainly by the dry foods and canned meat categories.

Fresh foods sales declined by 3.6% as the pie and bakery categories were adversely impacted by the reduced travel over the festive season.

The centralisation of the group’s pies and pastries business was successfully completed, with the KwaZulu-Natal pies and pastries operation (formerly Ma Baker) being integrated into the Gauteng pie and bakery facilities. The group is now well positioned for growth in this key category.

International turnover was 12.6% lower owing mainly to global logistics challenges and congestion at the Cape Town harbour which had a significantly adverse impact on exports in March.

However, customer demand remains strong and management is confident that volumes will recover in the second half despite the ongoing port congestion.

The group remains highly cash generative, with cash from operations increasing by 29% to R178 million (US$12.76m) in the six months.

RFG had set aside R250m (US4$17.92m) as capital expenditure for the full financial year, which would be used for the installation of an additional production line and a new warehouse at the fruit juice factory in Wellington as well as the upgrade of the bakery facility in Gauteng to accommodate the integration of the KZN pies and pastries operation.

RFG to grow brand share in second half

On the outlook for the second half of the financial year, Henderson cautioned that the rising Covid-19 infection rate in the country, together with the slow pace of the vaccination roll-out programme, increases the potential for a third wave of infections in the weeks and months ahead.

“This heightens the risk of the country reverting to lockdown restrictions which could adversely impact the group’s sales and profitability.”

He said while the consumer spending environment was expected to remain subdued in the short to medium term, they have seen a steady recovery in fruit juice and pie sales in the past few months.

“We expect to maintain the growth momentum in the dry foods category and the strong sales growth into the rest of Africa in the second half of the year.”

Its main focus in the regional business is on growing brand shares and increasing operating margin, while in the international business is to capitalise on customer demand to recover sales volumes.

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