JOHANNESBURG - Food producer Rhodes Food on Tuesday reiterated that trading conditions had deteriorated in the second half of its financial year due to increased net interest payments and slowing economic environment sales in certain product categories.
This as the producer of fresh, frozen and long life convenience meal solutions saw its profit after tax declining by 34.3 per cent to R154.3 million, with headline earnings 32.9 percent lower at R159.1 million, for the year ended 30 September 2018.
Rhodes Food said its earnings for the year ending September 30 were adversely impacted by the increased net interest payments which were R28.5 million higher at R112.9 million due to the increased capital investment programme, and lower levels of cash being generated owing to the lower profit over the past year.
This related mainly to the funding for the acquisition of Ma Baker, whose turnaround has been slower than expected even though good progress was being made to restore the profitability of the business.
Increased canned fruit costs as a result of the drought in the Western Cape over the past two seasons, weak industrial puree and concentrate pricing, and the strong currency also impacted the profitability of the international segment.
Diluted headline earnings per share decreased by 34.9 percent to 60.8 cents. A cash dividend of 20.3 cents was declared, which was 34.7 percent lower than the previous year, based on the group's dividend cover policy of three times.
The group said it continues to focus on working capital efficiency and net working capital reduced by R29.6 million, benefiting from the timing of creditor and debtor payments over year end.
Going forward, Rhodes Food said the focus in the regional segment will continue to be on driving organic growth, increasing brand shares and on improving margins, and the turnaround in the performance of Ma Baker was a priority and is progressing well.
The group expects the international segment to return to profitability in 2019 as export volumes are likely to continue to improve while foreign selling prices of canned fruit are anticipated to show a small increase.
Rhodes Food has committed capital investment of R200 million for the 2019 financial year and the three remaining major capital projects are scheduled for completion in the first quarter of the new year.