Annual results for the year ended 2 October 2022

Group revenue +21.9% to R7.3 billion Operating profit +54.1% to R574 million Group operating margin +160 bps to 7.9% Headline earnings +56.9% to R361 million Diluted HEPS +57.3% to 137.3 cents Dividend per share +57.4% to 45.8 cents

PROFILE

RFG is a leading producer of fresh, frozen and long life convenience meal solutions for customers and consumers across South Africa, sub-Saharan Africa and major global markets. RFG’s balanced portfolio of market leading brands, which includes Rhodes, Bull Brand, Magpie, Squish, Hinds and Today, is complemented by private label product ranges packed for all major South African retailers and international customers.

TRADING AND FINANCIAL PERFORMANCE

Group revenue increased by 21.9% to R7.3 billion in the 53 weeks to 2 October 2022 (2021: 52 weeks). Growth was driven by the recovery in the international business with strong demand for canned fruit and fruit puree products and a resilient regional performance in the constrained consumer spending environment.

The Today pie business generated revenue of R147.2 million for the eight months since acquisition and accounted for 2.5% of group revenue growth.

Revenue in the regional segment (South Africa and the rest of Africa) increased by 13.5% with acquisitive growth of 3.1%, volume growth of 2.5% and price inflation and mix changes contributing 7.9% to the increase in revenue for the year.

International revenue grew by 57.4% due to strong demand, with export volumes increasing by 18.3%. The group increased production volumes to meet the higher market demand arising from the failure of last year’s peach crop in Greece, the world’s largest exporter of canned peaches.

The group’s operating profit increased by 54.1% to R574.4 million with the operating profit margin expanding by 160 basis points to 7.9%.

Regional operating profit declined by 21.6% to R323.4 million as the operating margin reduced from 8.6% to 5.9%. Operating profit in ready meals, fruit juice, dry foods as well as pulps and purees increased as a result of stronger sales growth and improved operating profit margins. However, this was offset by pressure on operating margins due to delays in recovering higher input costs in the meat, vegetables and pie categories. The most significant inflationary pressure came from cans, meat, fats and oils.

The operating profit for the international segment increased by R202.2 million from R6.9 million to

R209.1 million as the operating margin recovered from 0.6% to 11.7%. The group secured good export pricing in trading currencies across the product portfolio and benefited from the market opportunity to increase volumes.

Headline earnings increased by 56.9% to R360.7 million. Earnings per share increased by 66.9% to 137.9 cents while headline earnings per share increased by 56.9% to 137.9 cents. Diluted headline earnings per share were 57.3% higher at 137.3 cents.

The performance for the past year has ensured that the group made pleasing progress in delivering on its medium-term financial targets, with the revenue growth target being exceeded, the operating profit margin expanding by 160 basis points and the return on equity improving from 8.1% to 12.5%.

OUTLOOK

In the year ahead the group aims to drive organic growth to expand brand shares while recovering volumes in canned meat, vegetables and pies. Management’s priority is to restore the regional operating profit margin which started to recover in the latter months of the financial year and into the new year.

The momentum in the international business is expected to be maintained owing to the improvement in international pricing and ongoing strong demand for RFG’s canned fruit products. The group continues to diversify its international sales and expand into new markets, including South America.

Management continues to evaluate opportunities for value-accretive bolt-on acquisitions aligned to the group’s strategy and core product categories.

Groot Drakenstein 23 November 2022