JOHANNESBURG - Food producer Rhodes Food said on Monday trading conditions had deteriorated in the second half of its financial year as declining consumer disposable income resulted in a sharp slowdown in sales growth.
Rhodes food said its earnings for the year ending September 30 would be adversely impacted by increased interest payments expected to be between R26 million and R28 million higher than the previous year.
This related mainly to the funding for the acquisition of Ma Baker, an increased capital investment programme and lower levels of cash generated as a result of the lower profit over the past year.
It said headline earnings were likely to be 28 - 38 percent lower than the R237 million reported for the previous year.
Earnings per share measures had been impacted by the 8.1 million or 3.3 percent increase in the weighted average number of shares in issue over the prior year relating to the issue of shares for the capital raise and the acquisition of Pakco.
Rhodes Food is due to release its results on November 20.
The company said it had maintained or grown market shares despite the tougher trading environment, with the pie category in particular proving resilient in the current consumer slowdown
"However, the turnaround in Ma Baker has been slower than expected and the business is anticipated to report a small loss for the full year," it said.
"Dry foods (formerly Pakco) continues to perform well and gain momentum from the relaunch of its brand portfolio earlier in the year."
Trading in the sub-Saharan Africa markets remained tough, owing to poor economic conditions and liquidity constraints in some major markets.
"The regional operating margin for the second half is anticipated to be at a similar level to the 7.8 percent reported for the first half, although the margin for the first six months was net of certain once-off costs," the company said.