Rhodes Food interim earnings down 3.1%, sees risk from Covid-19
JOHANNESBURG - Western Cape-based company Rhodes Food on Tuesday reported a 3.1 percent decline to 31.1 cents in diluted headline earnings per share for the half year ended March, although its turnover rose 9.6 percent to R2.9 billion.
Rhodes Food, which owns such brands as Rhodes, Bull Brand, Magpie, Squish, Bisto, Hinds and Pakco, said due to the anticipated negative impact of Covid-19 on South Africa's economy and the increased risk to the business, its management was focusing on cash preservation through tighter cost management and by reviewing all non-critical expenditure, including capital investment.
"Measures being undertaken include maximising exports to improve cash flow and the closure of factories where necessary. Increasing working capital efficiency and reducing debt levels remain priorities," it added.
The company has been able to continue operating throughout a lockdown imposed from March 27 to curb the spread of the coronavirus, as it is deemed an essential service to ensure ongoing food supply.
It acknowledged that consumer spending was likely to come under extreme pressure as the economy suffered the effects of the pandemic, but said Rhodes Food's broad range of product categories was providing a degree of resilience.
Interest rate reductions by the South African Reserve Bank, including a recent 100 basis point cut effected as an emergency measure to mitigate the impact of Covid-19, should have a material benefit to the group in the second half of the year, Rhodes Food said.
It added however that this could be partially eroded by increased borrowings owing to Covid-19 related impacts on cash flows.
The company said its supply chain continued to function efficiently despite numerous constraints related to the coronavirs, and the group had sufficient imported and local raw material stock cover.