Rhodes Food Group Earnings Up 136% On Strong Trading

Groot Drakenstein – Rhodes Food Group Holdings produced a strong trading performance in the year to September 2015 and increased normalised diluted headline earnings per share by 136% to 83.9 cents.

The Cape-based food producer increased turnover by 23.7% to R3 billion, with profit after tax up 106% to R170 million.

A maiden dividend of 24.8 cents per share has been declared.

Chief executive officer, Bruce Henderson, said the sales performance was driven by strong organic growth in the group’s regional business which accounted for 70% of total turnover.

“Regional sales increased by 32.5%, with market share gains across all our core product categories and significant growth in sub-Saharan African markets where sales were 55.2% higher. Rhodes operates in 14 other sub-Saharan African countries and sales have benefited from the addition of canned meat and fruit juice to our product range,” he said.

The fresh foods division increased sales by 19.5% with good growth in the pie category. Sales in the long life foods division grew by 44.8% through increased demand for Bull Brand products, canned fruit and vegetables, and the early contributions from the recent acquisitions of Pacmar and Boland Pulp.

International turnover recovered in the second half and increased by 7.1% for the year, also benefiting from the weakening of the Rand.

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

The group recently launched its own Rhodes branded range of 13 fruit juice flavours to a highly favourable response from major retail and wholesale chains.

Henderson said following the listing in October 2014 the group concluded four strategic acquisitions totaling R365 million in the 2015 financial year, significantly increased capital expenditure to expand production capacity and settled debt of over R430 million.

“Our strategy is to complement organic growth by expanding into new product categories which are complementary to our current products,” he said.

This strategy is evident in the acquisitions of fruit juice manufacturer Pacmar for R165 million, Boland Pulp, which produces fruit concentrates and purees, for R174 million and Saint Pie for R26 million. Deemster, a vegetable canning and salad bottling business, was purchased for R25 million.

After its September year end the group also announced the proposed acquisitions of the food service business of General Mills South Africa, which produces dry and frozen bakery products, and Alibaba Foods, which manufactures halaal Eastern foods.

“These two acquisitions will strengthen our position in the bakery and snacking categories, and provide increased exposure to the country’s fast-growing convenience food channel,” he said.

On the outlook for the year ahead, Henderson said the group will continue to drive organic growth through gaining market share and entering new product categories.

“We will realise further benefits from the ongoing turnaround in Bull Brand and continue to expand our presence in sub-Saharan Africa. Our international business is also well positioned for growth.”

“The four acquisitions concluded in 2015 will all be earnings accretive in 2016. The two largest acquisitions, Pacmar and Boland Pulp, are expected to perform strongly in the new financial year.”

Henderson said capital expenditure of R252 million will be invested in capacity expansion and the upgrading of production facilities in the year ahead.

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