Rhodes Food earnings gain 16% on strong regional sales
Johannesburg - Rhodes Food Group Holdings on Tuesday pointed to an increase in regional sales as it reported growth of 15.9 percent in headline earnings to R126 million for the six months to March 2017.
The Western Cape-based food producer, which owns a portfolio of brands including Rhodes, Bull Brand, Magpie, Squish and Bisto, increased group turnover by 8.2 percent to R2.2 billion, with operating profit 11.8 percent higher at R208 million.
Rhodes Food chief executive, Bruce Henderson, said regional sales, which includes South Africa and the rest of Africa, increased by 17.9 percent. "Our fresh foods division grew sales by 27.8 percent with excellent growth in pies and snacking.
Sales in the long life foods division increased by 12.3 percent despite the tougher trading environment both domestically and in other African markets," Henderson said. However, Rhodes Food said international sales declined by 20.7 percent owing mainly to the 11 percent strengthening of the rand against the group's basket of trading currencies.
As a result, export volumes were lower largely as a consequence of timing and are expected to normalise over the full 12 months. The group recently completed its two largest acquisitions with the purchase of Durban-based food manufacturer Pakco for R197 million and KwaZulu-Natal pie producer Ma Baker for R193 million.
Henderson said the acquisitions would enable Rhodes Food to enter the dry packed foods market, as well as strengthen the group's position in the growing pie and pastry market. Rhodes Food has invested more than R230 million in upgrading production capacity and efficiency in the past six months in the 15 production facilities it owns across South Africa and Swaziland.
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Capital investment of R220 million is planned for the second half of 2017. Henderson said Rhodes Foods aims to maintain its strong growth momentum by driving organic growth, achieving synergies from the recent acquisitions, growing brand shares and expanding its presence in sub-Saharan Africa.
"Our focus in the international segment is on growing sales to reverse the slower volume growth in the first half, while the volatile rand exchange rate continues to be a risk to our performance," Henderson said.
- African News Agency (ANA)