The year ending September 27 has seen JSE-listed food producer Rhodes Food Group integrate acquisitions that contributed 9.4% to the company’s turnover growth to R3-billion, up from R2.4-billion in the 2014 period.

However, the R365-million acquisitions of fruit juice manufacturer Pacmar, Saint Pie and fruit concentrates and purees producer Boland Pulp, effective on April 1, June 1 and August 3 respectively, would, therefore, only be accretive in the 2016 financial year.

Rhodes Food CFO Tiaan Schoombie explained that the company expected an Increase in earnings, but also an increase in debt, as debt was used to fund the acquisition costs.

As such, he emphasised that the post year end acquisitions of Deemster for R25-million, effective October 1; the food services business of General Mills South Africa, effective November 30; and Alibaba Foods for R42-million, effective February 1, 2016, would positively contribute to the group earnings before interest and tax in the 2016 financial year. However, these acquisitions were also partly funded by debt.

Deemster had been fully integrated into Rhodes Food, while General Mills was on schedule, and due diligence was in progress with regard to Alibaba Foods.

Turnover growth for the year under review was also influenced by volume growth, which added 4.8%, price inflation, with 7%, and foreign exchange impact, contributing 2.5%, for combined turnover growth of 23.7% during the period under review.

The company also saw strong organic growth in the regional segment, which accounted for 70% of group turnover compared with 65% in 2014.

Rhodes Food CEO Bruce Henderson advised on Monday that regional trading performance saw volume growth of 9.9%, with a sustained increase in the demand for canned fruit, jams, meat and vegetables. The Bull Brand turnaround was also well on track and in its final phase, with Rhodes Foods expecting to realise the benefits of the turnaround in the 2016 financial year.  The pie category also showed strong growth regionally, with the initial capacity improvement at the pie facility completed.

Excluding South Africa, sales in sub-Saharan Africa were up 55.2%, with good contributions from Pacmar over the last 6 months, and Boland Pulp, over the last two months.

The regional long-life foods segment experienced strong volume growth, improved brand share and factory efficiencies in Bull Brand, as well as the launch of new Rhodes packaging and a Rhodes brand of juices in September.

Growth in sub-Saharan Africa was lifted by adding canned meat and juice to the company’s product range, with Rhodes Food noting its intention of further expanding its presence in sub-Saharan Africa.

In terms of the regional fresh foods segment, good volume growth was recorded, particularly from pies. Rhodes Food had recorded growth in Corner Bakery business and there was opportunity for product extensions. Its acquisitions were also expected to provide opportunity for further growth in the bakery category, specifically in the convenience channel.

Internationally, Rhodes Food’s performance saw turnover recover in the second half as export orders normalised over the year, with Henderson highlighting that the international segment was managed on a 12-month cycle owing to the seasonality of orders and shipping.

The company’s core export products were canned fruit, fruit cups, bulk fruit purees and concentrates, and it continued to optimise its core offering of canned fruit.

Rhodes Food also highlighted a shift in fruit volumes from international to the regional market. Growth in the international segment was driven by the industrial channel – enhanced by Boland Pulp – and further value-add opportunities such as fruit cups.

Henderson commented that Rhodes Food would focus on organic growth through market share gains and entry into new categories, and the bakery and convenience channel.

In light of this focus, capital expenditure (capex) of R252-million had been approved for 2016, which Rhodes Food would use to continue its investment in manufacturing facilities, he noted. There was also capacity to raise debt to fund capex and current acquisitions.

Rhodes Food was committed to achieving its medium-term targets, namely gross profit margin of above 30% and operating margin of more than 10%.

Normalised operating profit was up 31% to R311-million for the year ending September, while normalised operating margin increased by 10.3% from 9.7%, profit after tax climbed by 105.9% to R169.8-million, normalised diluted headline earnings a share improved by 136.3% to 83.9c a share and a maiden dividend of 24.8c a share was declared.