JOHANNESBURG - The group's chicken business unit was expected to report earnings before interest, tax, depreciation and amortisation profit for the year, after posting a trading loss in the interim results to December 2016.
Rainbow Chicken in Hammarsdale was forced to cut 1 350 jobs early this year after it reduced its operations to a single shift by reducing the two-shift system. However, the group managed to place more than 200 workers in other operations to limit further job losses.
The group eliminated a portion of loss making individually quick frozen product in its operations as the local producers were battling high poultry imports from the EU and the US.
RCL Foods, formerly Rainbow Chickens, is among the country’s largest chicken producers. The group now has three core divisions after it restructured in 2015 and resulted to consumer division, sugar & milling division and logistics division.
In the trading update, the group said it expected its headline earnings per share (Heps) for the year to end June to be between 57.5c and 67.5c a share, a decline of between 41.6% 31.5% when compared to the reported Heps of 98.5c compared to the same period last year.
The earnings per share (Eps) was expected to be between 57c and 61c, resulting in a 133.6% to 150% increase compared to the Eps of 24.4c compared with last year.
The group said the improvement in earnings per share is largely related to the milling impairment in the prior year.
Impairments of R123.8m after tax in the chicken business unit relating to redundant plant and equipment identified as part of the decision to reduce commodity chicken volumes and from the related decision to dispose of the Tzaneen chicken operation contributed to an earnings per share increase in the period.
The impairments were excluded from Heps while the impact on Eps was a negative 14.3c, restatement of last year results. The group also said recognition in the current period of R37.4m after tax in restructuring costs and fair value adjustments on biological assets, also associated with the decision to reduce chicken volumes.
The impact on Heps and Eps was a negative 4.3c.
Lastly an insurance receipt in the current period relating to the Pongola silo, which was damaged in July 2015, with R84.8m after tax related to the assets portion of the claim and R20.8m after tax relating to prior year business interruption. The impact on Heps is a positive 2.4c and a positive 12.2c on Eps.
RCL Foods results are expected to be released on August 29.