Spreads to fatten margins?
RCL Foods still playing chicken?
Will investment giant Remgro spread out the brands portfolio at RCL Foods to make its underperforming foods subsidiary a more nourishing prospect for investors? As it stands, Remgro owns 77% of RCL, which owns brands such as Selati sugar, Rainbow chicken, Supreme Flour, Sunbake bread, Yum Yum peanut butter and Ouma rusks. But RCL’s stock has floundered, rising just 25.6% over five years — far behind rivals AVI (up 64.7% over that time), Pioneer Foods (up 108%) and Tiger Brands (37.5%). Optimists claim RCL is long overdue a period of outperformance. And yet, questions linger about whether the company is really lean and mean enough to compete with larger rivals. A quick scan of the most recent RCL annual report shows some startling statistics: RCL’s employee costs stand at almost 17% of revenue, with operating profit generated per employee coming in at less than R40,000. This stands in stark contrast to Tiger Brands, which has a staff-cost ratio of 10.5% of revenue and operating profi...
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