RCL Foods, a leading South African consumer goods and milling firm funded by South Africa’s richest man Johann Rupert, expects a 75% increase in headline profits per share (HEPS) for the fiscal year that ends this month.
This expansion is being driven by the great performance of its Rainbow unit and the grocery sector. In a statement issued on Monday, RCL Foods claimed that it expects HEPS from overall operations to be at least 75% higher than the 68.3 cents reported last year.
The value-added business area, notably the grocery segment, has seen significant improvement. This is mostly due to the restoration of pet food quantities, which were earlier hampered by load-shedding-induced service level difficulties. The improvement in pet food volumes, combined with higher margins, has significantly contributed to the segment’s excellent performance.
The bread, buns, and rolls unit continues to trade in a competitive climate. This competition has put pressure on both volume and margins, impacting the baking division’s performance. The sugar division, on the other hand, has consistently delivered strong operating results. This success is linked to high international sugar prices, which have provided major benefits to the division.
Rainbow, which RCL Foods is in the process of unbundling and listing separately on the Johannesburg Stock Exchange (JSE), expects its second-half EBITDA performance to be essentially comparable to the first half of the fiscal year, which ends in December 2023. Seasonality, particularly during the December holiday season, often results in better commerce in the first half of the year.
Several factors improved Rainbow’s financial performance in the second half of the fiscal year. These include cost-cutting initiatives, increased retail and wholesale volumes, lower input prices, and a successful containment of the Avian flu pandemic.
RCL Foods owns various well-known brands, such as 5 Star Maize Meal, Ouma Rusks, and Bobtail Dog Food. The corporation has deliberately positioned these brands to maintain market dominance and generate expansion.
RCL Foods intends to report its annual results on September 2. The expected increase in earnings reflects the company’s performance and initiatives to overcome market difficulties and seize growth prospects.
RCL Foods’ predicted 75 percent increase in full-year earnings demonstrates the success of its emphasis on key business units and cost management, with excellent results in groceries and sugar, as well as consistent performance from Rainbow, placing the company for continued growth and value creation for shareholders.
