Rhodes Food Group earnings are up 87% on strong trading

Rhodes Food Group Holdings today reported a strong trading and financial performance for the six months to March 2016 and increased diluted headline earnings per share by 87.2% to 48.1 cents.

Turnover increased by 54% to R2 billion with profit after tax 89% higher at R110 million.

Chief executive officer Bruce Henderson said the robust sales growth was due to continued organic growth, the benefit of the acquisitions concluded in the past year and the depreciation in the Rand which boosted international revenue.

The Cape-based food producer has increased market share across key product categories, driven by increased marketing activity and product development and innovation.

The Rhodes Brand

The Rhodes brand is the country’s market leader in canned pineapple, tomato paste and jam in glass jars, with number two positions in canned fruit, canned jams, canned vegetables and canned tomatoes. Bull Brand is the market leader in corned meat.

Regional turnover, which accounted for 75% of group turnover, increased by 57%. The fresh foods division increased sales by 21% with particularly good growth in the pie category. The resilience of higher income consumers has been beneficial for fresh food sales in the current constrained spending environment.

Sales in the long life foods division grew by 89% with sustained increase in demand for canned foods and fruit juice, supported by a significant investment in sales and marketing.

Henderson said customer response to the Rhodes branded range of fruit juices launched in September 2015 has been extremely positive. The group is currently increasing production capacity at its fruit juice factory in Wellington.

Rhodes operates in 12 other sub-Saharan African countries where sales increased by 87%, mainly through higher canned meat and juice products sales.

International turnover grew by 45% owing largely to the 24% depreciation in the Rand against the group’s basket of trading currencies.

The acquisitions of Deemster, General Mills and Alibaba Foods were finalised in the first half of the financial year and have been integrated into the group’s operations.

Henderson said the six acquisitions made since the group’s JSE listing in late 2014 are all performing well and contributed revenue of R484 million in the six months. “These recently acquired businesses have enabled Rhodes to enter the new product categories of fruit juice, baby food, bottled pickles and salads, and bakery products,” he said.

Capital expenditure of R104 million was invested mainly in upgrading the meat production plant and increasing capacity at the fruit juice factory. A further R150 million capital expenditure is planned for the second half of 2016.

Discussing the outlook for the remainder of the financial year, Henderson said the group is focusing on gaining market share, entering new product categories and expanding its presence in sub-Saharan Africa.

“We expect to maintain our growth momentum into the second half and for our recent acquisitions to contribute positively,” he added.

Ends
Issued by Tier 1 Investor Relations on behalf of Rhodes Food Group Holdings
For further information kindly contact
Graeme Lillie
Tier 1 Investor Relations
082 468 1507