Johannesburg - RCL Foods, South Africa’s largest chicken producer, said full-year profit probably fell as much as 80 percent after it wrote down $48 million in its milling business and the nation’s worst drought in more than a century hurt its sugar and poultry units.
Earnings per share were in the range of 20c to 30c in the year ended June 30 from 99c a year earlier, the Durban-based company said in a statement Thursday. The results will be released August 30.
“The sugar and chicken business units have been adversely impacted by the worst drought in southern Africa in the past 100 years,” it said. “Chicken results have also been adversely impacted by the massively oversupplied poultry market as a result of surplus domestic volumes as well as record levels of dumped imports.”
South Africa last year had the least rainfall since records started in 1904, damaging crops and herds and raising food prices. Its farmers will need as much as R16.6 billion in the year through March to subsidise feed purchases, a study by the AgriSA lobby group and others showed.
The milling unit recorded lower forecast cash flows in the period, resulting in a R642.8 million impairment on goodwill and trademarks that reduced per-share earnings by 75c, RCL said. Profit was boosted by the release of a R163.3 million provision for uncertain tax disputes as part of the producer’s purchase of New Foodcorp Holdings and the recognition of profit from options to sell shares in its Zambian hatching operation.
The stock dropped as much as 6 percent, the most in more than a month, and was 5.3 percent lower at R14.20 at 1.53pm in Johannesburg, giving the company a market value of R13.3 billion.
The company, formerly known as Rainbow Chicken, has since 2013 sought to move into sugar and other food products by acquisitions to reduce its reliance on meat.
BLOOMBERG