RFG’s shares rise on back of strong trading update

THE shares of RFG Holdings rose by more than 4 percent on the JSE on Friday morning after the South African food producer released a strong trading update for the six months to March 28, with earnings expected to climb as much as 49 percent.

The Western Cape-based company owns brands such as Rhodes, Bull Brand, Magpie, Squish, Bisto, Hinds and Pakco.

The group said it was likely that its headline earnings per share (Heps) would rise by between 44 and 49 percent, to between 44.9 cents and 46.5c a share, up from last year’s Heps of 31.2c.

The group’s headline earnings were also expected to increase by between 44 and 49 percent compared with last year’s headline earnings of R81.6 million.

Its earnings per share (Eps) were expected to increase by between 32 and 37 percent, to between 39.9c and 41.4c, up from 30.2c last year.

RFG said it had delivered a resilient operating performance in the Covid-19-impacted trading environment during the period.

“The half-year results for the period will reflect the benefit of a net foreign exchange movement of R67.2m, as well as a reduction of R19.2m in interest payments due to lower borrowing rates and reducing debt levels,” the group said.

On Friday, the share leapt to a day-high of R12.73 after the release of the trading update, up from Thursday’s closing price of R12.18. The stock closed 0.57 percent higher at R12.25.

RFG’s turnover fell by 3.4 percent during the period because of the impact of the Covid-19 restrictions on its fruit juice and pie categories, the base effect of the exceptionally strong regional sales performance in March last year ahead of the national lockdown, and slower international export volumes in March this year because of congestion at Cape

Town harbour. RFG incurred onceoff costs of R14.9m related to the centralisation of the pies and pastries business, and R16.8m for related property impairments.

In November last year, the group announced that it was closing its KwaZulu-Natal pies and pastries business to cut costs and create efficiencies.

The pies and pastries business was consolidated into the Gauteng pie facility in Aeroton and the bakery products factory in Linbro Park.

RFG acquired the pies and pastries business, formerly known as Ma Baker Pies, in 2016 for R212m.

The group expects to release its half-year results on May 19.