Rhodes raises its dividend by 37 percent
DURBAN – Rhodes Food Group Holdings (RFG) has upped its dividend by 37 percent after the food producer reported strong earnings growth for the year to end September, boosted by regional sales growth and recovery in the international business.
The Western Cape-based food producer, which owns market-leading brands like Rhodes, Bull Brand, Magpie, Squash, Bistro soup, Hinds and Pakco, said sales of long-life foods increased by 9.2 percent and good growth was reported in fruit juice, dry foods and canned meat, with baked beans being the fastest-growing category. The group declared a dividend of 27.9 cents a share, up from last year’s 20.3c.
Rhodes Food reported a 39.6 percent increase in profit after tax to R215.5 million, while headline earnings rose by 38.1 percent to R219.8m, and earnings per share leapfrogged 35.4 percent to 82.7c. The group’s turnover was up by 8.5 percent to R5.4 billion, and headline earnings per share increased by 33.3 percent to 84c.
“The results benefited from robust regional sales, the early signs of recovery in the international business and expanding margins,” chief executive Bruce Henderson said.
International turnover increased by 8.8 percent, assisted by the 7.7 percent depreciation of the rand against RFG’s major trading currencies, with operating margin improving to 7.2 percent compared to last year’s 6.3 percent.
Fresh foods increased sales by 7.3 percent, with ready meals proving resilience in the consumer downturn and the pie category stable in a highly competitive market. Henderson said the group expects to maintain the current positive growth momentum, based on the strong turnaround in performance in 2019 and the recovery in the international business.
“While consumer spending is likely to remain under pressure in the weak macroeconomic environment, our regional business will continue to focus on driving organic growth, increasing brand shares and improving margins,” Henderson said. He added that following the good recovery in the international business, the business is well positioned to continue improving profitability in the year ahead.
“Our priorities for the year ahead include improving our balance sheet by generating stronger cash flows to reduce debt levels, containing costs and continuing to evaluate strategic acquisition opportunities,” he said.
During the year the group successfully integrated the protein snack food business acquired from RCL Foods with the new business contributing sales of R33m in the six months since acquisition.
Rhodes Food owns 15 production facilities across South Africa and Eswatini, and it invested R232m in capital projects during the year, with R150m of capital investment planned for the next financial year.
These included the expansion of its Western Cape ready meals production facility, the relocation of its pulps and purées plant from Wellington and the ongoing development of new pineapple plantations in eSwatini.