20 Nov 2019 Rhodes Food makes good in bad economic times

Rhodes Food Group has reported a strong rise in full-year earnings, helped by a recovery in its international operations and a weaker rand. Baked beans have been a notable performer in its broad basket of products.

The Western Cape-based food producer owns brands that include Rhodes, Bull Brand, Magpie, Squish, Bisto, Hinds and Pakco, amongst others. It also helps to fill supermarket shelves with private label brands, pies and ready meals, which it says proved resilient in the consumer downturn.

This business was boosted in the second half of the year after it acquired RCL Foods’ protein snack food business, which supplies Woolworths with items including meat balls and chipolata sausages.

But it was long-life foods that reported the best sales last year, with baked beans the fastest growing category.

Turnover rose 8.5% to R5.4-billion in the year to 29 September, in line with growth at its SA and rest of Africa operations, which contribute 80% of total turnover.

Good growth in canned meats, fruit juice and dry foods resulted in sales growth of 9.2% at its long life foods unit. Fresh food sales increased by 7.3% on steady volumes. International turnover increased by 8.8%, assisted by the 7.7% depreciation in the value of the rand against the group’s major trading currencies.

“While consumer spending is likely to remain under pressure in the weak macroeconomic environment, our regional business will continue to focus on driving organic growth, increasing brand shares and improving margins.

“Our priorities for the year ahead include improving our balance sheet by generating stronger cash flows to reduce debt levels, containing costs and continuing to evaluate strategic acquisition opportunities.” Bruce Henderson, CEO

Operating profit jumped 25% to R392-million as its operating margin expanded by 90 basis points to 7.2%. Its international operating margin recovered to 3.4%, from -0.5%, as a result of the weak rand.

It said profitability was materially impacted by the drought-related impact on costs and the quality of its canned fruit in the first half of the year.

Profit after tax increased by 40% to R216-million and diluted headline earnings per share rose 38% to 83.8. It’s lifted its total dividend for the year by 37% to 27.9c per share.

The group said it was likely to maintain the current positive growth momentum in the year ahead, based on its recent strong turnover performance and the recovery in the international business, with an expected increase in the export of fruit snacks in cups to the US and higher canned fruit exports.

Source: InceConnect.co.za