South Africa’s Rhodes Food lifts interim operating profit 6% to US$12.04m

SOUTH AFRICA – Rhodes Food, a South African food company, reported an improved performance for the six months to March as operating profits grew 6 percent to US$12.04 million (R173m).

Rhodes Food increased turnover by 9.3 percent to US$187.94 million (R2.7bn) while sales in its regional and international businesses increased by 8.8 percent and 12.3 percent respectively benefiting from higher export volumes and a weaker rand.

Bruce Henderson, chief executive officer of Rhodes, noted that the regional business across South Africa and sub-Saharan Africa posted a resilient performance reflected by the strong volume growth.

This was amid an environment of low inflation and constrained consumer spending, he said.

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Henderson said the group’s profitability was impacted by the recent drought in the Western Cape on the quality of deciduous canned fruit as well as costs arising from the relocation of the group’s pulps and purees plant from Wellington to Groot Drakenstein.

“These factors were partially offset by tailwinds from the 10.5 percent weakening in the rand against our major trading currencies,” Henderson added.

The company, whose brands include Rhodes, Bull Brand, Magpie, Squish, Bisto, Hinds and Pakco produced in 15 production facilities across South Africa and Eswatini, said headline earnings increased by 2.1 percent to US$5.85 million (R84m).

The company said its long-life foods segment increased turnover by 13.4% mainly attributed to better volumes.

“Initial assessments reflect an improvement in the quality of the fruit after being affected by the drought for the past two years. Volumes were, however, slightly lower than the previous year.”

Henderson said that the firm expected a strong second half performance despite consumer spending being under severe pressure while the international division was expected to continue improving its operating margin in the second half.

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“The deciduous fruit production season has recently been completed and early indications are that the quality of fruit has improved after being affected by the drought for the past two years.

“After completing our major capital investment programme, we are focused on generating returns on the capital invested and extracting benefits to improve margins across the business,” said Henderson.

Rhodes Food Group said it planned to spend US$5.57 million (R80m) on capital investment in the second half of the financial year.

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