Tuesday, 16 April 2024
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Chickens ready to fly the coop

Home Agriculture Chickens ready to fly the coop

RCL Foods delivered a pleasing set of results for the six months ended December 2023 in a challenging environment, according to a company SENS announcement issued on 4 March. The board attributed the improved result mainly to Rainbow Chickens and the sugar business.

It said despite the negative impact of Avian Influenza in the current period, Rainbow delivered an improved result due to the continued execution of the turnaround plan, which drove an improvement in agricultural performance and operating efficiencies, coupled with higher volumes and margins.

Sugar’s improvement was achieved, despite lower crop yields and largely attributable to higher market prices. Volume challenges in the culinary category, partially offset by the recovery in volumes in the pet food category, following a restoration of service levels, drove a muted result in the grocery operating unit.

Despite volume pressure, the beverages operating unit delivered an improved result mainly due to strong cost control. Within the baking business unit, improved margins in milling, pies and speciality were partially offset by a disappointing performance in bread, buns & rolls. The bread, buns & rolls operating unit continues to face an extremely competitive operating environment, with higher input costs and promotional activity leading to further margin pressure.

Following the strategic review of RCL Foods, the board provided its preliminary approval on 1 March 2024, to pursue the formal separation of Rainbow, via an unbundling to shareholders and a concurrent listing on the JSE. The board is of the view that the unbundling of Rainbow will enable both businesses to pursue their respective growth ambitions, and investment theses, in a focused manner and with improved alignment on capital allocation priorities.

With the Rainbow separation process still in progress, the board of directors resolved not to declare an interim dividend.

Vector Logistics

The Vector Logistics segment was classified as a discontinued operation during the second half of the previous financial year and was subsequently sold in August 2023. Vector Logistics reported a profit before tax of R263,1 million for the period to 28 August 2023 which includes the R255,7 million profit arising from the disposal of the Vector Logistics segment. The information provided in the majority of the statement relates to continuing operations which refer to the remaining operations excluding the Vector Logistics segment.

Group financial results for the six months ended December 2023

  • Revenue from continuing operations up 8.4% to R20,1 billion
  • Earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) from continuing operations up 48.6% to R1 506,8 million
  • Underlying* EBITDA from continuing operations up 32.4% to R1 436,0 million
  • Headline earnings per share (HEPS) from continuing operations up 52.6% to 81.2 cents
  • Earnings per share (EPS) from continuing operations up 67.0% to 90.0 cents
  • HEPS from total operations up 43.3% to 80.8 cents
  • EPS from total operations up 108.0% to 119.8 cents

*The underlying view of the results excludes material once-offs and accounting adjustments. Refer to the “Reconciliation between unadjusted and underlying results” section provided as part of the interim results announcement for further details.

 

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