Groot Drakenstein – Recently listed Rhodes Food Group increases earnings by 117% in normalised headline earnings per share to 36.6 cents in its maiden interim results for the six months to March 2015.
The Cape-based food producer increased turnover by 12% to R1.3 billion and grew profit after tax by 52% to R58 million.
Regional sales increased by 18% to R950 million, accounting for 73% of group turnover. The Fresh Foods division increased sales by 20% through strong growth in supply to Woolworths and Corner Bakery. Sales in the Long Life Foods division grew by 17% through increased customer demand for canned fruit, meat and vegetables.
Chief executive officer, Bruce Henderson, said the strong growth has arisen from market share gains in key product categories and significant growth in the Sub-Saharan African markets.
“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, acquired by the group in 2013, is the iconic market leader in corned meat,” he said.
Sales in Sub-Saharan Africa (excluding SA) increased by 39%, driven by the increasing focus on these African markets and the addition of canned meat to the product range. Rhodes operates in nine other African countries.
International turnover declined marginally to R345 million due to a shift in timing of export orders from the first half into the second half and increased volumes of canned fruit being sold into the regional market. Importantly, production volumes were similar to the corresponding period last year and shipments are expected to normalise over the full financial year.
Henderson said following the listing in October 2014 the group has made four strategic acquisitions, significantly increased capital expenditure to expand production capacity and settled debt of over R420 million.
“Our strategy is to complement organic growth by expanding into new product categories which are complementary to our current products.”
Pacmar, the Wellington-based fruit juice manufacturer and distributor, was acquired by the group for R165 million from April 2015. Pacmar produces fruit juices and beverages for local, regional and international markets under third party, private label and its own brands Wilde, Amazing, Zing and Crystal Falls.
In February 2015 the group announced the acquisition of Boland Pulp for R160 million. Boland Pulp produces bulk juice concentrates and purees for the domestic and regional markets, and also exports to over 30 countries internationally. Through its retail division Boland Pulp sells purees, sauces and baby foods in innovative re-sealable pouches. This transaction is subject to competition approval.
The group also announced plans to acquire Deemster, a vegetable canning and salad bottling business in Bethlehem, for R25 million.
Henderson said these acquisitions provide a neat entry for Rhodes Food Group into the new categories of baby foods, pickles and long life bottled salads such as gherkins and beetroot.
Saint Pie, a producer of pies and pastry products based in Lydenburg, Mpumalanga, was acquired for R27 million earlier this month.
On the outlook for the second half, Henderson said the group will continue to drive organic growth and expand market share while increasing sales in Sub-Saharan Africa and ensuring a strong performance from the international division.
“Pacmar is well positioned for organic growth following its successful integration and the short-term focus will be on increasing production capacity and growing market share both regionally and internationally. The acquisitions of Boland Pulp, Deemster and Saint Pie are expected to be finalised shortly,” added Henderson.
Issued by Tier 1 Investor Relations on behalf of Rhodes Food Group Holdings
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