Food producer RFG Holdings, which owns brands including Rhodes, Bull Brand and Hinds, yesterday posted annual earnings growth of a whopping 57% boosted by higher global demand for canned fruit products
For the year ended October 2, 2022, the group increased its revenue by 21.9% to R7.3 billion and operating profit by 54.1% to R574 million.
RFG increased its dividend by 57% to 45.8c per share.
RFG CEO Pieter Hanekom said the group delivered strong sales growth for the year, with the regional business posting a resilient performance in the constrained consumer spending environment and benefiting from the Today acquisition.
The international division, which accounts for 25% of group revenue, experienced robust growth in export volumes due to increased demand for canned fruit and fruit purée products.
International revenue grew by R118m due the weakening of the rand against the group’s basket of trading currencies.
“International revenue grew by 57.4% with export volumes up 18.3%. The group increased production volumes to meet the higher market demand arising from the failure of last year’s peach crop in Greece, the world’s largest exporter of canned peaches,” it said.
Meanwhile, revenue in the regional business increased by 13.5%.
“Fresh foods grew revenue by 19.9%, with ready meals achieving good volume growth and proving resilient in the weak spending environment. Long life revenue grew by 9.9%, with fruit juice being the main revenue driver,” RFG said.
RFG’s products are sold in 12 other African countries and revenue from these territories grew by 14.5% to R414m.
The sales performance for the year ensured that RFG maintained its market share positions in all product categories, it said.
Hanekom said the regional business continued to be affected by significant input cost inflation, mainly from cans, meat, fats and oils, which affected sales and profitability, largely in canned meat, canned vegetables and pies.
“The cost increases were not fully recovered, which adversely impacted the profitability of the regional business, although the margin started to recover in the latter months of the financial year,” he said.
RFG has 14 production facilities across South Africa and eSwatini, located close to end markets and sources of raw materials.
“During the past year the group invested R260 million in the maintenance and expansion of these facilities. This included the completion of a new warehouse at the fruit juice plant in Wellington, the integration of the Today pie business, equipment upgrades at the eSwatini and Gauteng pie facilities and the completion of the pineapple plantation expansion in eSwatini. Capital investment of R250m is planned for the 2023 financial year,” the group said.
The Today pie business, which is the tenth acquisition by RFG since listing on the JSE in 2014, was successfully integrated into the group’s operations, generating revenue of R147m for the eight months since being acquired.
RFG said it was expanding its renewable energy infrastructure to reduce the impact of load shedding.
“Solar installations are planned for a further three production sites in the new financial year. The group is also investing in increasing water storage capacity at some facilities to mitigate the impact of electricity-related water supply interruptions,” it said.
Looking ahead, Hanekom said management aimed to drive organic growth to expand brand shares.
“The significant inflationary input cost pressures experienced in the past year appear to be stabilising and we are focusing on recovering increased costs from the market. Price, volume and margin management will be important to restore the profitability in the regional business.
“We expect to maintain the momentum in our international business owing to the improvement in international pricing and ongoing strong demand for our high quality canned fruit products. The fruit intake will normalise in the new year relative to the higher intake of the prior year due to the increased demand following the Greek crop failure. The group continues to diversify its international sales and expand into new markets, including South America,” he said.
RFG would also continue to evaluate opportunities for value-accretive bolt-on acquisitions aligned to the group’s strategy and core product categories, he said.
BUSINESS REPORT