Rhodes Food to maximise benefits of recent acquisitions next year
RHODES Food Group (RFG) said yesterday that its focus in the year ahead would be on driving organic growth and maximising benefits from its recent acquisitions.
The group acquired food manufacturer Pakco for R197 million and KwaZuluNatal pie producer Ma Baker for R193m early this year.
The group said both acquisitions had been successfully integrated into the group and contributed a turnover of R230m in the group’s results for the year to end September.
However, both acquisitions contributed only for six months as they were integrated at the beginning of March.
Commenting on the recent acquisitions, chief executive Bruce Henderson said Pakco had a range of strong brands, including the iconic Bisto brand, Hinds Southern Coating, Pakco and Trotters, and the acquisition has enabled RFG to enter the dry-packed foods market.
“Ma Baker has strengthened our position in the growing pie and pastry market and also creates synergies with our existing pie, snacking and bakery businesses,” Henderson said.
The group is planning to spend R350m as capital investment in 2018 with major projects including the consolidation of certain production facilities acquired through recent acquisitions, capacity expansion at the pie and bakery facilities, and the installation of a clear juice concentrate plant at the Groot Drakenstein production hub adjacent to the RFG head office in Cape Town.
Capital expenditure in 2017 was R487m.
In the results published yesterday, the group reported a 10.8 percent increase in turnover to R4.6 billion, with strong growth in South Africa and the rest of Africa and lower international revenue.
The group grew regional sales 21.4 percent and achieved organic growth of 12.7 percent.
It said the strengthening of the rand significantly lowered global demand for industrial pulp and purée products and increased canned fruit costs as a result of the drought in the Western Cape, which resulted in international sales declining 18.1 percent.
The group cautioned that while the outlook for the international canned fruit market was positive, the continued drought in the Western Cape was expected to impact costs owing to poorer quality fruit, which will result in lower yields and higher labour costs.
Gains in the regional business were offset by the lower international performance which contributed to operating profit declining 18 percent to R407m, while headline earnings were 19 percent lower at R237m. Diluted headline earnings per share decreased 27 percent to 93.4 cents.
Sales in the rest of Africa, where RFG operates in 12 countries, increased 47 percent, driven by robust demand for canned meat and fruit juice across the region.
The group declared a cash dividend of 31.1c.
In the regional segment, fresh foods grew sales 30.1 percent with continued excellent growth in the pie category across all sales channels and good growth in ready meals.
RFG owns 14 production facilities across South Africa and Swaziland.
Rhodes Food shares rose 1.08 percent to close at R18.80 on the JSE yesterday.