The headline earnings of JSE-listed Rhodes Food declined by 19.1% to R237-million for the financial year ended October 1, as regional gains were offset by a disappointing international performance.
Diluted headline earnings a share decreased by 27% to 93.4c for the year under review, with earnings a share also declining from 132.1c in 2016 to 95.9c for the year under review.
“The gains in the regional segment were offset by the reduction in international profitability, which resulted in group profit after tax declining by 20% to R234.8-million,” said Rhodes CEO Bruce Henderson on Tuesday.
Delivering the company’s year-end financial results presentation, he said the international operations had been dragged by the strengthening rand; reduced demand for industrial products, in particular, industrial pulp and puree products; pricing pressure; and higher costs.
However, strong regional sales lifted group turnover by 10.8% to R4.6-billion.
The regional segment, which accounted for 80% of group revenue, generated a 21.4% increase in turnover, with organic growth of 12.7%, while sales in sub-Saharan Africa, excluding South Africa, increased by 46.8%, driven by robust customer demand for canned meat and fruit juice.
International turnover declined by 18.1%.
During the year under review, the group generated strong cash flows of R347.1-million, nearly R45-million higher than in the previous year.
The group's two largest acquisitions to date, Pakco and Ma Baker, had been consolidated for six months in the year, contributing combined turnover of R230-million.
Moving forward, Rhodes plans to focus on the regional business, driving organic growth, maximising benefits from the recent acquisitions and big capital investment projects, growing brand shares and capitalising on the sales momentum in sub-Saharan Africa.
“Following the completion of the Pakco and Ma Baker integration programmes, the focus in the year ahead will be on brand architecture, product upgrades and improved distribution. Both businesses are expected to be earnings accretive in the 2018 financial year,” Henderson said.
“While the outlook for the international canned fruit market is positive, the continued drought in the Western Cape is expected to adversely impact input costs owing to poorer quality fruit, which will give rise to lower yields and higher labour costs,” he added.
Rhodes plans to invest R350-million into its major projects in the 2018 financial year, including the consolidation of certain production facilities acquired through recent acquisitions, capacity expansion at the pie and bakery facilities, and the installation of a clear juice concentrate plant at the Groot Drakenstein production hub.
This followed the record capital expenditure of R487-million into the upgrading of production capacity and efficiency in the past year.
These included the construction of the flexible packaging and baby foods factory at Groot Drakenstein, the completion of the three-year upgrade of the Bull Brand facility, increasing production capacity at its fruit juice, fruit products, vegetable and pie facilities and production capacity expansion and efficiency improvement projects at Pakco and Ma Baker.
Rhodes declared a dividend of 31.1c a share for the year ended October 1.