Johannesburg - Rhodes Food Holdings, which owns brands such as Bull Brand, Magpie and Squish, says its previous deal-making aided growth in its local market.
The listed company reported turnover up 53.5 percent to R2 billion in the six months to March. It also reported an improvement in gross profit margins, which gained 0.6 percentage points to 28.2 percent. Profit after tax almost doubled, gaining 89.2 percent to R110 million and headline earnings per share - a key measure of profitability - came in at 50.1 c, a 36.9 percent gain on a normalised basis.
In a statement issued on Monday, the company said the increase in turnover was due to “strong organic growth
and the integration of the acquisitions made over the past 12 months”. It adds the depreciation of the rand boosted international revenue.
CEO Bruce Henderson says the robust sales growth was due to continued organic growth, the benefit of the acquisitions concluded in the past year and the depreciation in the Rand which boosted international revenue.
The Cape-based food producer says it has increased market share across key product categories, driven by increased marketing activity and product development and innovation.
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Regional turnover, which accounted for 75 percent of group turnover, increased 57 percent. The fresh foods division increased sales 21 percent with particularly good growth in the pie category. “The resilience of higher income consumers has been beneficial for fresh food sales in the current constrained spending environment.”
Sales in the long life foods division grew by 89 percent with sustained increase in demand for canned foods and fruit juice, supported by a significant investment in sales and marketing, Rhodes says.
The group, which operates in 12 other sub-Saharan countries, is currently increasing production capacity at its fruit juice factory in Wellington.
International turnover grew 45 percent owing largely to the 24 percent depreciation in the rand against the group’s basket of trading currencies.
The acquisitions of Deemster, General Mills and Alibaba Foods were finalised in the first half of the financial year and have been integrated into the group’s operations.
Henderson says the six acquisitions made since the group’s JSE listing in late 2014 are all performing well and contributed revenue of R484 million in the six months. “These recently acquired businesses have enabled Rhodes to enter the new product categories of fruit juice, baby food, bottled pickles and salads, and bakery products,” he says.
Capital expenditure of R104 million was invested mainly in upgrading the meat production plant and increasing capacity at the fruit juice factory. A further R150 million capital expenditure is planned for the second half of 2016.
Discussing the outlook for the remainder of the financial year, Henderson says the group is focusing on gaining market share, entering new product categories and expanding its presence in sub-Saharan Africa.
“We expect to maintain our growth momentum into the second half and for our recent acquisitions to contribute positively,” he added.
IOL