Higher sugar levy, loadshedding, chicken feed costs to cut RCL’s earnings
JSE-listed food manufacturer RCL Foods expects to report at least a 30% decrease in headline earnings per share (HEPS) for the financial year ended June 30.
Compared with the prior year’s HEPS of 118.6c, HEPS for the reporting year will be at least 35.6c less, the company warns.
It attributes the decrease in earnings to a special levy raised by the South African Sugar Association (SASA) on the group’s sugar business unit, the significant impact of loadshedding across all operations and unrecovered feed costs in the Rainbow business.
The group explains that the South African sugar industry is in a state of uncertainty following sugar manufacturers Tongaat Hulett and Gledhow Sugar Company having entered into business rescue.
These companies have not paid all their dues to SASA, which has resulted in other industry participants having to bear additional costs in the form of a special levy to cover the shortfall.
The net impact of the special levy on RCL to date has been R234-million.
RCL says it is uncertain whether any company will be able to recover unpaid levies and redistribution payments from Tongaat and Gledhow.
The group says litigation has started related to the lawfulness of the decision by the appointed business rescue practitioners of Tongaat to suspend compliance with its statutory obligations.
Meanwhile, RCL will report its Vector Logistics business as an asset held for sale in the upcoming yearly results, since RCL concluded an agreement to dispose of the business on March 29.
RCL will release its full-year results on or about September 4.
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