On Rhodes to good fortune with expected 45% earnings rise
DURBAN – Rhodes Food Group’s (RFG) share price gained more than 7 percent yesterday after the producer of convenience meal solutions said it expected its annual earnings to rise by up to 45 percent.
The group attributed the increase to good revenue growth, expansion of gross profit and operating margins.
RFG expected its headline earnings to increase by between 35 and 45 percent for the year end to September, up from last year’s headline earnings of R159.1 million.
The group said earnings had benefited from an income tax rebate of R10m relating to capital projects during the year.
The owner of Bull Brand, Magpie, Ma Baker and Pakco said its turnover during the period had increased by 8.2 percent compared with last year while its regional segment delivered a resilient performance and grew turnover by 8.1 percent.
“Within the regional segment, long life foods increased turnover by 9.1 percent and fresh foods turnover was 6.7 percent higher,” the group said.
The regional operating margin improved despite the adverse effect of the lower margin long life foods category growing at a faster rate than fresh foods.
The group’s international turnover rose by 8.8 percent, benefiting from the 7.7 percent depreciation of the rand.
“The international margin strengthened as a result of a favourable product mix towards higher value-add products and the weaker rand,” the group said.
Its earnings per share (eps) is expected to increase by between 32 and 37 percent to be between 80.7 cents and 83.7c a share, up from last year’s eps of 61.1c.
RFG said its eps had been impacted by an increase of 3.6 percent in the weighted average number of shares in issue during the reporting period due to the conversion of preference shares to ordinary shares in the first half of the year.
Headline earnings per share (heps) were expected to rise by between 31 and 36 percent to between 82.1c and 85.1c, up from 63c while diluted heps were expected to rise by between 35 and 40 percent to be between 82.1c and 85.1c, up from last year’s 60.8c.
RFG releases its results on November 19. Its share price rose 4.87 percent to R16.15 on the JSE yesterday.