RFG said yesterday that it was planning to rationalise certain commercial operations and close its KwaZulu-Natal pies and pastries business at the end of the month in an effort to cut costs and create efficiencies. Photo: Supplied
RFG said yesterday that it was planning to rationalise certain commercial operations and close its KwaZulu-Natal pies and pastries business at the end of the month in an effort to cut costs and create efficiencies. Photo: Supplied

RFG gets ready to close its KZN pie and pastry operation

By Sandile Mchunu Time of article published Nov 18, 2020

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RFG, previously Rhodes Food Group, said yesterday that it was planning to rationalise certain commercial operations and close its KwaZulu-Natal (KZN) pies and pastries business at the end of the month in an effort to cut costs and create efficiencies.

The group said the KZN pies and pastries operation, formerly known as Ma Baker Pies, would be consolidated into the Gauteng pie facility in Aeroton and the bakery products factory in Linbro Park.

“This rationalisation will create production efficiencies and cost savings, which will benefit the group in the current difficult trading conditions,” the group said.

RFG acquired the KZN pies and pastries operation in 2016 for R212 million.

RFG reported an 8.3 percent increase in turnover to R5.9 billion for the year to end September 27 despite difficult trading conditions caused by the Covid-19 outbreak, which hurt its sales and profitability in the fruit juice and pie categories and curtailed its exports to China.

The Western-Cape based food producer, which owns marketleading brands Rhodes, Bull Brand, Magpie, Squish, Bisto, Hinds and Pakco, increased sales across South Africa and sub-Saharan Africa by 6.6 percent and international sales by 15.5 percent.

Chief executive Bruce Henderson said the Covid-19 and the lockdown restrictions created an abnormal trading environment in the second half of the financial year.

“The lockdown impacted key product categories and sales channels and resulted in higher costs, temporary factory closures and pressure on consumer spending,” Henderson said.

The group benefited from the depreciation of the rand during the period and boosted its sales and profitability in RFG’s international business, but the benefit was negated by net foreign exchange hedging losses of R54.6m and significantly lower exports of canned fruit to China.

RFG’s operating profit was consistent with the previous year at R392m and the operating profit margin declined from 7.2 to 6.7 percent.

Its headline earnings increased by 3.2 percent to R227m while headline earnings per share increased by 3.2 percent to 86.7 cents a share.

The group increased its dividend by 3.2 percent to 28.8c.

Its cash generated from operations increased by 21.6 percent to R602m and the group reduced its debt by R238m.

Henderson said the three categories most impacted by Covid-19 had all experienced encouraging recoveries.

“Juice sales showed a turnaround in September and October, pie sales have made a pleasing recovery since lockdown restrictions were relaxed, while canned fruit export volumes to Asia have shown an improving trend since July,” Henderson said.

Looking ahead, Henderson said that while Covid-19 would continue to impact the group into 2021 through slower sales due to the deteriorating economic conditions in the country and weaker consumer spending, compounded by rising unemployment in the country, the outlook was still favourable.

RFG shares closed unchanged at R12.50 on the JSE yesterday.

BUSINESS REPORT

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