Rhodes invests R220m to boost growth
The company said some of the money would be used to upgrade the production facilities at the newly acquired Pakco and Ma Baker.
Chief executive Bruce Henderson said Rhodes invested more than R230 million in the past six months in upgrading production capacity and efficiency.
“We want to ensure that our new acquisitions like Ma Baker and Pakco get their facilities upgraded to show good returns in the future,” said Henderson.
Rhodes Food recently completed its two largest acquisitions with the purchase of the Durban-based food manufacturer Pakco for R197 million and KwaZulu-Natal pie producer Ma Baker for R193 million.
But both the purchases were not included in the results the company released on Tuesday for the six months to end March.
“The acquisitions got the Competition Commission approval at the end of March,” Henderson pointed out. “We are excited about Ma Baker and Pakco and we believe they will be good additions to our business.”
Pakco has a portfolio of strong brands including the iconic Bisto brand, Southern Coating, Hinds, Trotters and Gold Dish and the purchase will enable Rhodes Food to enter the dry-packed foods market.
“Ma Baker is the market-leading pie brand in KwaZulu-Natal. The acquisition will strengthen our position in the growing pie and pastry market and create synergies with Rhodes Food’s pie, snacking and bakery businesses. The integration programmes for both Pakco and Ma Baker are progressing well,” said Henderson.
The expected successful integration and expanding the group’s market share across the continent is making Rhodes Food feel bullish about its prospects going forward.
The group 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,” he said.
Henderson said Rhodes Food remained committed to achieving its medium-term margin targets which should ensure sustained growth in returns to shareholders.
The group reported 15.9 percent growth in headline earnings to R126 million. The food producer, which owns a growing portfolio of market-leading brands including Rhodes, Bull Brand, Magpie, Squish and Bisto, increased group turnover by 8.2 percent to R2.2 billion while operating profit was 11.8 percent higher at R208 million, as the group operating margin expanded by 30 basis points to 9.7 percent.
Regional sales, which includes SA and the rest of Africa, increased by 17.9 percent.
Rhodes Food shares declined 4.81 percent on the JSE to close at R22.18.