Sugar and chicken imports choke RCL
The food company says full-year earnings could fall by at least 20% in difficult conditions
RCL Foods, the consumer goods and milling company majority owned by investment firm Remgro, on Tuesday said its sugar and chicken businesses were set to drag its earnings lower by at least 20% in the year to end-June.
Difficult conditions in the two businesses were also a major factor in the interim results of the owner of Selati, Number One Mageu and Yum Yum brands.
RCL on Tuesday said full-year headline earnings per share and earnings per share were expected to be down by 19.4c per share and 21.3c per share from their 2018 value.
The company, a manufacturer of a wide range of branded and private label food products, said the sugar business’s performance was expected to be significantly down due to lower realised margins.
“Local market demand has been severely impacted by the implementation of the health promotion levy, negative health perceptions of sugar and uncontrolled imports, resulting in higher volumes of sugar being sold into the lower margin raw export market,” RCL said.
The group, which is set to release its full-year results in September, said the chicken business also suffered from an “oversupplied” retail poultry market as chicken imports remained high. It said the business also took strain from higher feed input costs which could not be recovered “due to the depressed selling prices”.
RCL said its grocery brands, however, performed strongly in the second half of the financial year.
RCL shares were down 1.48% to R13.99 on Tuesday.