Now comprising sugar, grocery, and baking business units, RCL Foods of South Africa reports higher revenue and profit for the fiscal year just ended. Its Poultry operations were spun off at the end of the reporting period.
Releasing its results for the 12 months to June 30, 2024, RCL Foods describes its financial performance for the period as “pleasing.”
The group reports that it maintained focus on business aspects within its control. Furthermore, it commented that economic conditions in South Africa remain challenging, and consumer demand is still under pressure. Providing some relief was the suspension of load-shedding (interruptions to the electricity supply), it says.
For the financial year just ended, RCL Foods’ revenue was up 6.8% year-on-year at 26.0 billion rand (ZAR; US$1.45 billion). Driving this revenue lift was the group’s success in passing on the continued high cost of inputs to its customers.
Profit — expressed as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) — was reported 36.8% higher than in the 2022-2023 fiscal year at just over ZAR2.3 billion. Excluding material once-offs and accounting adjustments, underlying EBITDA was over ZAR2.2 billion.
During the reporting period, RCL Foods sold its Vector Logistics business, and its Rainbow poultry business was unbundled, and listed separately on the Johannesburg Stock Exchange on July 1, 2024.
RCL Foods reports that strong cash generation and proceeds from the earlier sale of its Vector Logistics business allowed the group to recapitalize its poultry operation, Rainbow.
Since the unbundling of Rainbow was completed, RCL Foods reports it has resumed the payment of dividends.
The figures reported relate to the group’s continuous operations, which now comprise the segments Groceries, Baking, Sugar, and Group (shared services).
“At RCL Foods, our priority is to ensure the sustainability of our business in line with our purpose, which includes continuing to provide affordable food to consumers, keeping our people employed and providing an acceptable return on investment,” said CEO Paul Cruickshank. “This entails carefully balancing revenue, margin and profit and responsibly managing trade-offs, while remaining committed to our long-term stakeholder value creation strategy.”
Animal feed, pet food performed well for RCL Foods in 2023-2024
The largest of the group’s three continuing operations in terms of revenue is its Sugar business unit. Comprising sugar and Molatek animal feeds, this unit increased revenue by 6.4% to more than ZAR11.8 billion. Higher prices in both domestic and export markets, improved agricultural performance and an outstanding result by Molatek helped to drive up underlying EBITDA by almost 21% to more than ZAR1.27 billion.
Comprising groceries and beverages, RCL Foods’ Grocery business delivered a 5.5% increase in revenue of around ZAR5.31 billion for the fiscal year just ended. Performance improvements were achieved by both elements, and underlying EBITDA was over ZAR497 million — 22.6% higher than in 2022-2023. The group reports improved Pet Food margins for this unit.
While revenue for its third business unit — Baking — was up 5.9% year-on-year to more than ZAR9.1 billion, EBITDA for these operations declined to a similar degree.
More on RCL Foods
With annual slaughterings of 197 million birds last year, RCL Foods’ former poultry business Rainbow is the second largest poultry company in Africa, according to WATTPoultry.com’s Top Poultry Companies survey.
Results for the first period of trading as Rainbow Chickens — independent of RCL Foods — are scheduled for release at the end of this month.
Molasses-based feeds for ruminants are among the products in the group’s Sugar business brand, Molatek.
In the latest 12 months, RCL Foods reports total animal feed sales last year of 330,036 metric tons. Daily pet food production by the group is reported at 82,000 bags.
