RFG bears fruit in tough climate
Food producer RFG holdings, whose brands include Rhodes, Bull Brand and Hinds, hiked its dividend as it navigated a tough consumer spending environment to deliver a jump in profit. “The significant inflationary input cost pressures experienced in the past year appear to be stabilising,” CEO Pieter Hanekom said.
Food producer RFG holdings, whose brands include Rhodes, Bull Brand, Magpie, Squish, Hinds and Today, hiked its dividend as it navigated a tough consumer-spending environment to deliver a jump in profit.
The Western-Cape based food producer declared a dividend of 45.8c per share for its year to October 2, a 57.4% yearon-year increase.
“The significant inflationary input cost pressures experienced in the past year appear to be stabilising and we are focusing on recovering increased costs from the market,” CEO Pieter Hanekom said.
“We expect to maintain the momentum in our international business owing to the improvement in international pricing and ongoing strong demand for our high-quality canned fruit products,” he added.
The company, valued at R3.12bn on the JSE, manufactures canned fruit, jams and canned meat and, like its peers, RFG has had to increase selling prices to cushion themselves against the surge in prices of soft commodities, which has been aggravated by Russia’s invasion of Ukraine.
But, it managed to deliver R7.3bn in revenue, growth of one-fifth, boosted by the Today pie business, RFG’s 10th acquisition since listing in 2014, which generated R147m in revenue in the eight months from when it was acquired.
Regional revenue, which includes SA and 13 other countries in Sub-Saharan Africa, rose 13.5%, while the weaker rand partly helped international revenue grow 57.4%. The regional business makes up threequarters of total revenue.
Fresh foods was the star performer in the regional business as its revenue advanced nearly one-fifth vs the almost onetenth of long-life products.
Ready meals also achieved good growth and proved resilient as the disposable income of consumers was squeezed, with pie volumes continuing to recover.
The demand was strong for canned fruit and fruit purée products abroad despite the constrained consumer spending environment.
The group benefited from the failure of 2021’s peach crop in Greece, the world’s largest exporter of canned peaches, as it upped its product to meet the higher demand.
“Canned fruit and fruit purée production volumes will normalise in the 2023 financial year after being accelerated in 2022 to take advantage of the lower Greek production output,” the company said.
In the financial year, R260m was spent on the maintenance and expansion of its 14 facilities in Southern Africa, including completing a new warehouse at the fruit juice plant in Wellington, integrating Today, equipment upgrades at pie facilities in Eswatini and Gauteng, and finalising a pineapple plantation expansion in Eswatini.
“The volume of pineapple products to be exported from RFG’s Eswatini facility will be increased following the development of new plantations over the past few years. Production is expected to reach full capacity by the 2024 financial year,” the company said.
A further R250m has been earmarked for capital expenditure in the new financial year, including R50m for the expansion and replacement of pineapple plantations in Eswatini, solar installations for three more production sites to offset the impact of load-shedding, and increasing water storage capacity at some facilities to mitigate the effect of electricity-related water supply interruptions.
In other financials, profit for the year rose 67.2% to R361.9m and headline earnings, a profit measure that strips out impairments and one-off items, jumped 56.9% to R360.7m.
THE SIGNIFICANT INFLATIONARY INPUT COST PRESSURES EXPERIENCED IN THE PAST YEAR APPEAR TO BE STABILISING