Groot Drakenstein – RFG Holdings delivered strong revenue growth of 20.9% to R3.4 billion for the half-year to 3 April 2022, supported by good volume growth in its regional and international businesses.
The Western-Cape based food producer, which owns market-leading brands Rhodes, Bull Brand, Magpie, Squish, Hinds and Today, increased operating profit by 30.6% to R241 million.
The group’s normalised operating profit, excluding once-off restructuring costs and insurance proceeds, increased by 2.6% to R222 million. Headline earnings increased by 32.5% to R158 million and normalised headline earnings grew by 3.2% to R134 million.
RFG received an insurance payout of R43 million in March 2022 for loss of profits during the Covid-19 lockdown in 2020.
Chief executive officer Pieter Hanekom said the group produced a strong revenue performance despite the constrained consumer environment in South Africa and the logistics challenges which affected the export business in particular.
He said the group’s performance was impacted by significant input cost inflation, with the largest impact being experienced in cans, meat, oils and international freight. “We have been unable to fully recover the raw material price increases from customers and consumers which has resulted in our margins declining.”
RFG’s regional business, which includes South Africa and 13 other countries in sub-Saharan Africa, increased revenue by 15.5%. Regional long life foods revenue grew by 16.4% with volume growth of 13.4%. Fruit juice and dry foods continued to deliver strong growth which contributed to increased market share in these highly competitive categories. Regional fresh foods turnover increased by 14.1%. Ready meals continued to prove resilient in the weak consumer spending environment and achieved good volume growth. While pie sales continued to recover, meat price inflation and increased competitor activity placed pressure on margins.
Strong demand for the group’s canned fruit products contributed to international turnover increasing by 53.0% as export volumes grew by 32.7%.
RFG is South Africa’s leading manufacturer of canned fruit, jams and canned meat. The Rhodes brand is the country’s market leader in canned pineapple and canned tomato and the number two brand in canned fruit, fruit juice, baby food and canned vegetables. Bull Brand is the market leader in corned meat.
During the first half of the year RFG successfully completed the acquisition of the Today pie business from Pioneer Foods for R53.7 million (including inventory of R43.3 million).
Hanekom said the acquisition complements RFG’s growing pies and pastries offering and provides access to the top end retail channel with well-known brands Today and Mama’s, expanding the group’s presence in the pie market. The Today business has been relocated from Atlantis in the Western Cape to RFG’s pie production facilities in Gauteng and the group incurred once-off restructuring costs of R24 million.
On the outlook for the second half of the financial year, Hanekom said the group aims to continue to drive organic growth to further expand its brand shares, while the sales momentum into the rest of Africa is expected to be maintained.
“Our ongoing focus is on recovering increased input costs from the market and generating operating efficiencies to counter the impact of cost pressure on margins.”
“International demand for RFG’s canned fruit products remains strong and the group continues to diversify its international sales and expand into new markets despite the current global shipping challenges,” he said.
Hanekom added that RFG is investing in renewable energy infrastructure to reduce the impact of loadshedding on the group’s production facilities, with solar installations planned for a further two sites in the months ahead.
Issued by Tier 1 Investor Relations on behalf of RFG Holdings
For further information contact Graeme Lillie, Tier 1 Investor Relations
082 468 1507