Rhodes loss of R44m due to drop in exports
JOHANNESBURG - The international segment of Rhodes Food Group (RFG) reported a loss of R44 million in the six months to end March due to Covid-19 disruption after the food producer experienced a slowdown in exports of canned fruit to China from early January.
The group said there were limited shipments made to China in the first quarter of 2020 and exports were further impacted by constraints at the Cape Town port in March, contributing to a decline of 11.5 percent in international volumes.
As a result, the international segment reported a loss of R44 million compared to a profit of R3.7 million a year earlier, with a marginal growth of 0.5 percent in sales.
Despite the setback, Rhodes Food reported a 9.6 percent increase in turnover to R2.9 billion, boosted by an 11.5 percent increase in regional business across South Africa and sub-Saharan Africa.
March sales rose by 22.2 percent following the state of disaster being declared in the country and ahead of the introduction of the national lockdown.
Profit after tax declined by 3 percent to R77.8 million, while headline earnings slowed down by 3 percent to R81.6 million.
The group’s earnings per share declined by 2.3 percent to 30.2 cents a share and headline earnings per share fell by 2.8 percent to 31.2c.
Chief executive Bruce Henderson said the group expected an improvement in the canned fruit category.
“We expect a slow recovery in the export of canned fruit into China from around July this year. However, the recent deterioration in the rand against the US dollar exchange rate will have a significant benefit on international profitability in the second half of the financial year which will help to bring about a recovery in this segment of our business,” he said.
Its long life foods increased turnover by 12.6 percent and volume growth was up by 6.3 percent. Fresh Foods sales increased by 9.6 percent, with volume growth of 4.7 percent and acquisitive growth of 3.2 percent.
Looking ahead, Henderson said consumer spending was likely to come under extreme pressure as the economy suffered from the effects of the lockdown measures.
“RFG’s broad range of product categories is providing a degree of resilience and the focus in the regional segment in the months ahead will be on driving organic growth, maintaining margins and increasing brand shares,” Henderson said.
The group is focusing on cash preservation through tighter cost management, reviewing all non-critical expenditure and maximising exports to strengthen cash flows. It repaid term loans of R121.8 million while capital expenditure was reduced to R87.2 million.
Rhodes' share price closed 2.37 percent higher at R14.25 on the JSE yesterday.