
04 Sep 2015 RCL beds down its diversification beyond chicken
After a rousing year of deal-making, diversified food producer RCL Foods is now eyeing “a bigger share of consumers’ stomachs” as part of its growth ambitions.
This is the view of CEO Miles Dally (above) who says RCL Foods, which is 77.7% owned by investment holding company Remgro, is growing its exposure beyond its traditional chicken business Rainbow.
RCL Foods’ recent acquisition of Foodcorp, producer of Ouma Rusks and Yum Yum peanut butter, and sugar and milling company TSB, have been its diversification move.
“We wanted to create a food business with scale in order to drive that growth wide. We also did not want to be a chicken business only,” says Dally.
RCL Foods, formerly Rainbow Chicken, has embarked on a restructuring exercise to bed down its latest acquisitions.
The counter formerly operated its subsidiary entities TSB, Foodcorp, Rainbow Farms and logistics entity Vector. These businesses have now been structured into three divisions – Consumer, Sugar & Milling and Vector.
The Consumer division includes Rainbow Chicken, as well as Foodcorp’s grocery, beverage, pie and speciality divisions. The Sugar & Milling division includes TSB, Rainbow’s animal feed unit Epol and Foodcorp’s milling and baking business. Vector continues to operate as a standalone business.
Its restructuring efforts seem to be paying off. RCL Foods has recovered from losses of R332.6 million in 2014, as it declared headline earnings from continuing operations of R964.65 million for the 12 months to June 30, 2015.
Looking ahead, RCL said, “The burden of a constrained market, together with the expectation of rising interest rates, labor demands, electricity disruptions and continuing high unemployment is expected to hamper any sustainable improvement in consumer spending. These issues will have an impact across the segments in which the group operates.”….