RFG Holdings’ turnover up 9 percent despite impact of Covid-19

RFG HOLDINGS, formerly known as Rhodes Food Group Holdings, said yesterday that despite lockdown restrictions hitting three of its categories in the 11 months to end August, overall group turnover was up by 9 percent compared to last year.

RFG food brands include Rhodes, Bull Brand, Squish, Magpie, Ma Baker, Pakco, Hinds, Southern Coating and Bisto.

“The abnormal trading conditions which prevailed during the second half of the group’s 2020 financial year have been most challenging. While the group has continued to report healthy topline growth, lockdown restrictions have impacted three key categories in particular, which has adversely affected operating profit,” the group said.

Turnover in the regional segment, which is South Africa and the rest of Africa, increased by 7.4 percent, benefiting from the significantly increased demand for long life foods during the national lockdown.

The regional long life turnover achieved a double-digit growth of 10.3 percent, with volume growth of 1.4 percent and strong growth was reported in dry foods, supported by the launch of the Hinds Spices range in the first quarter.

“However, the growth in dry foods and the sustained demand for canned food during the lockdown, particularly canned vegetables and meat, was offset by a decline in juice volumes which were severely impacted for the five months since the start of the lockdown mainly due to the restrictions on entertainment and the closure of schools,” the group said.

Its fresh foods turnover increased by 2.7 percent and volumes declined by 4.3 percent, with ready meals volumes largely sustained during lockdown. However, pie sales declined sharply from April to June, primarily due to the slowdown in convenience and forecourt traffic during lockdown compounded by government restrictions on the sale of hot meals during certain stages of lockdown.

Regional operating profit was adversely impacted by sales mix, lower juice and pie volumes and increased operating costs due to the Covid-19 pandemic.

“Once-off costs included Covid-19 related expenses of R7.6 million and R7m related to the rationalisation of the KZN pie manufacturing facilities into the Pinetown facility and the closure of the Pietermaritzburg facility,” RFG said.

International turnover increased by 15.9 percent due to the 15 percent depreciation of the rand against the basket of trading currencies.

“While international volumes have recovered since July, the marked slowdown in canned fruit exports in the first half of the financial year contributed to volumes being 1.2 percent lower for the period,” RFG said.

While the depreciation in the rand had had a positive impact on top-line sales and profitability, this benefit was partially negated by the hedging impact of forward-exchange contracts, which were at a lower exchange rate. RFG expects to release its results on September 27.

RFG shares closed 2.12 percent lower at R12.90 on the JSE yesterday.