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RFG CEO Pieter Hanekom. Picture: SUPPLIED
RFG CEO Pieter Hanekom. Picture: SUPPLIED

RFG Holdings, whose products include Bull Brand corned beef, Hinds spices and Bisto gravies, has grown headline earnings by 20% at the halfway stage, but expects consumer spending to remain under pressure for the remainder of the year. 

Headline earnings for the six months to end-March increased by 20.7% to R261.7m, with diluted headline earnings per share (HEPS) 20.4% higher at 99.8c.

Group revenue increased by 3.2% to R3.9bn as regional segment sales volumes declined amid weak domestic consumer environment, it said in a statement on Wednesday.

Profit after tax increased to R260.9m from R218m a year ago.

Operational challenges at the Cape Town port and softer international pricing, which was partially offset by foreign exchange gains, affected revenue from the international segment.

Price inflation of 6.9% drove revenue growth as the group recovered higher input costs.

Revenue in the regional segment increased by 5.8% while sales volumes declined by 5.5% due to constrained consumer spending and increased competitor promotional activity in some product categories, it said.

Long life foods increased revenue by 7.5%. The three largest categories of fruit juice, meat products and dry foods continue to deliver good growth, supported by improved performances in the vegetable and salad categories, it said.

Fresh foods revenue increased by 2.9%, with the pie category growing volumes while the ready meals category benefited from the resilience of higher-income customers.

Graphic: DOROTHY KGOSI
Graphic: DOROTHY KGOSI



International segment revenue declined by 8.6% due to softer international pricing relative to the previous period as well as the decline in export volumes due to lower opening stock levels. This was compounded by the challenges at the Cape Town port, particularly in the past few months.

Lower sales volumes were partially offset by depreciation in the rand against the group’s basket of trading currencies, which contributed 5.5% to revenue growth.

“Despite the pressure on sales volumes, the group has improved its operating profit margin by driving profitable growth, recovering inflationary increases on raw material and packaging costs, and extracting cost savings from operational efficiencies.”

Load-shedding related diesel costs reduced to R19.6m from R37.8m in the prior period. These factors contributed to the group’s operating profit increasing by 15.2% to R399m, with the operating profit margin improving by 100 basis points to 10.2%.

Looking to the rest of the year, the group expects consumer spending to remain under pressure and interest rates are now expected to start declining only in the 2025 financial year.

RFG said it would keep driving sales and brand-share growth through a heightened focus on product innovation, particularly in the fruit juice and dry foods categories.

Input costs have generally moderated from the high levels experienced over the past two years, which should ensure that the operating profit margin is maintained at 10% through-the-cycle.

In the international business, customer demand for RFG’s canned fruit products remains strong and management will maintain its focus on volume recovery in the second half of the year, despite the port challenges.

RFG aims to maintain the international operating profit margin at 10% through-the-cycle.

Capital expenditure of R300m is planned for the full financial year.

mackenziej@arena.africa

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