RCL Foods falls 12% on profit warning
The consumer goods and milling group has attributed the fall in earnings to difficulties at sugar and chicken businesses
RCL Foods shares slumped 12.5% on Thursday after the owner of Selati, Number One Mageu and Yum Yum brands, said it expected interim earnings to fall by more than 28% due to difficulties in its sugar and chicken businesses.
The consumer goods and milling company, which is majority owned by investment firm Remgro, said it expected headline earnings per share for the six months ended December 2018 to be down by between 28.9% and 23.5%, compared to the same period in 2017.
The company said earnings per share would fall by between 10% and 15.3%. “The earnings decline was largely attributable to the difficult trading conditions experienced in the sugar and chicken units over the past six months,” the company said.
RCL said the performance of the sugar business would be down as dumped imports and lower domestic demand resulted in a higher proportion of export volumes at depressed international prices.
The chicken business unit was also expected to be down mainly as a result of rising feed input costs and high levels of imports which the company said drove retail prices lower. It said the unit’s Rainbow brand was also feeling the impact of the outbreak of listeriosis.
The company, however, said its grocery brands had performed strongly.