RCL Foods grows revenue, declares dividend, despite higher input costs
Earnings before interest, taxes, depreciation and amortisation (Ebitda) improved by 7.7% year-on-year to R2.59-billion for the year under review.
RCL declared a total dividend of 45c a share.
The company says the pleasing set of results demonstrate its resilience in a challenging operating environment and amid commodity input cost increases that continue to place margins under pressure.
RCL Foods CEO Paul Cruickshank noted during a presentation of the company’s results on September 5 that the group maintained forward momentum despite a difficult operating environment, including consumers constrained with rising inflation and record unemployment and continued and “unprecedented commodity input cost increases that are placing producers and consumers under pressure”.
The company’s response has been to maintain a strategic focus on controllable elements with sharpened strategy and prioritised operational execution on key imperatives, he said.
Ebitda growth was driven by continued momentum in the Sugar division; a return to profitability in the Chicken business, which is now referred to as Rainbow; and a solid performance in Vector Logistics.
Volumes have remained relatively stable across most categories and several value-added brands grew their market share.
Headline earnings per share (HEPS) increased by 9.9% to 118.6c and earnings a share (EPS) by 2% to 114c. EPS for the year were lower than HEPS largely owing to the post-tax impact of net impairments recognised, which is excluded from the calculation of HEPS, the company said.
Meanwhile, RCL Foods is making progress on its strategic transformation journey, aimed at creating a profitable, sustainable value-added business of scale, and to scale its core value-added component through sharper strategic focus and active investment, said Cruickshank.
“We are committed to growing our value-added business in a well-considered way. The previous Group and Food division executive teams have been consolidated into a single executive structure with a stronger operational connection that is driving improved strategic alignment. All these businesses are supported by our central functions and business services organisation,” said Cruickshank.
Further, in re-engineering the organisational structure to support the group’s value-added focus, RCL Foods has also revised its strategy with the vision of creating “a business of the right scale which has been built to last, with a diverse and high-performance culture that delivers category growth ahead of the market and enhanced stakeholder value”.
Its strategic pillars include a diverse, high-performance culture, and a business of the right scale that is built to last.
RCL Foods CFO Rob Field highlighted that the Ebitda margin decline of 0.6% was mainly owing to pervasive commodity input cost pressures, and the moderate decline was evidence of the resilient performance of the group given the significant input cost increases borne by business units.
Meanwhile, against the backdrop of a difficult trading year, Rainbow has done well to return to profitability as part of its turnaround plan, and Vector Logistics has delivered another improved set of results, aided by higher revenue and efficiencies, RCL Foods said.
Rainbow’s revenue increased by 10% to R11.38-billion, up from R10.3-billion in the financial year ended June 30, 2021. Underlying Ebitda grew by 214% to R348.6-million, albeit off a low base of R111-million in the prior period.
Improvements in pricing and agricultural results, procurement gains and buoyant quick service restaurant (QSR) sales helped to offset the cost impacts of commodity price increases and AI mitigation measures. The Simply Chicken value-added brand introduced several freezer-to-fryer innovations during the year, and Simply Chicken viennas continued to outperform the market with double-digit growth, the company said.
Courtesy of Engineering News – read full article here.