RFG’S R324M INVESTMENT IN ESWATINI, SA EARNINGS UP 18.2%

MBABANE - RFG Holdings increased headline earnings by 18.2 per cent to R577 million in the year to September 2024, mainly driven by the strong performance of its regional business.
Rhodes Food Group (RFG) invested R324 million in its production facilities across South Africa and Eswatini during the year, which included large-scale equipment replacement and upgrades as well as capacity expansion at the Tulbagh fruit products and Krugersdorp meat products factories. Capital investment of R430 million is planned for the new financial year.
The Western-Cape based food producer, which owns market-leading brands Rhodes, Bull Brand, Magpie, Squish, Hinds and Today, increased group operating profit by 12.7 per cent to R852 million.

Target

The operating profit margin improved by 100 basis points to 10.6 per cent, exceeding the group’s medium-term target.The group’s debt position improved significantly as debt levels reduced by 37.1 per cent and the net debt-to-equity ratio improved to 11.9 per cent from 21.3 per cent. Based on the sustained profit and earnings growth, the directors have increased the group’s dividend payout ratio to shareholders from 33.3 per cent to 50 per cent of headline earnings. The total dividend was accordingly increased by 79.2 per cent to 111.1 cents per share. CEO Pieter Hanekom, said the group’s regional segment, covering South Africa and sub-Saharan Africa, delivered resilient revenue growth despite the sustained pressure on consumer spending.

Regional revenue increased by 5.9 per cent to R6.4 billion, with sales volumes recovering strongly in the second half as consumer confidence started to improve in the country. Long life foods revenue grew by 6.5 per cent and fresh foods revenue by 4.9 per cent. Revenue was supported by an increased focus on product and packaging innovation, including the launch of the Rhodes fruit nectar juice range which has been well received by consumers.

Investment

Regional operating profit increased by 28.1 per cent to R675 million as the operating profit margin expanded from 8.8 to 10.6 per cent. Hanekom said margins benefitted from production efficiency gains from recent capital investment, including the new canning equipment and capacity expansion at the meat products plant in Krugersdorp. The group recorded market and brand share gains in several key product categories. The group’s brands are the market leaders in canned meat (Bull Brand), canned tomato (Rhodes) and frozen pies and pastry (Today), and hold the number two brand positions in fruit juice, canned fruit, jam, canned vegetables (all Rhodes), baby food (Squish) and spices, herbs and pepper (Hinds).

International revenue, which accounts for 20 per cent of the group’s total revenue, declined by 12.5 per cent due to weaker global pricing and demand for canned deciduous fruit. Revenue was further impacted by the lower volumes due to ongoing shipping delays at the Cape Town and Durban ports.  While the international operating profit margin was 160 basis points lower at 11.4 per cent, it remains well within management’s targeted 7.5 to 12.5 per cent range. On the outlook for the year ahead, Hanekom said lower inflation, declining interest rates, reducing fuel prices and the absence of load shedding are positive for consumer confidence. “These factors together with South Africa’s improved growth prospects are expected to stimulate a recovery in consumer spending in the next 12 to 18 months.” “In our international business, the continued equipment upgrade and replacement programme at the Tulbagh fruit products plant will support further efficiency gains to counteract the headwinds of a stronger exchange rate and lower global pricing,” he added.

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