Rhodes outperforms in H1 on organic, acquisitive growth
JSE-listed food producer Rhodes Food Group has more than doubled its earnings for the six months ended March 27, pushed up by strong organic growth and the integration of the acquisitions made over the past 12 months.
Speaking at the group’s interim results presentation in Sandton on Monday, CEO Bruce Henderson told shareholders that all the acquisitions completed in 2015 were stable and performing well, while the takeovers undertaken in the first half of the new financial year were successfully integrated.
The acquisitions of Alibaba Foods, canning and bottling company Deemster, the food service business of General Mills, fruit juice manufacturer Pacmar, fruit concentrates and purees producer Boland Pulp and pie manufacturer Saint Pie contributed 37.4%, or some R484-million, to the 53.5% growth in turnover to R2-billion for the six months under review.
“These recently acquired businesses have enabled Rhodes to enter the new product categories of fruit juice, baby food, bottled pickles and salads and bakery products,” he said.
During the first half of the year, group profit after tax increased by R51.8-million to R109.9-million, with headline earnings for the period 86.6% higher at R110.2-million, said CFO Tiaan Schoombie.
Normalised headline earnings per share (HEPS) increased 36.9% to 50.1c, while diluted HEPS surged 87.2% from 25.7c to 48.1c.
Gross profit margin rose to 28.2% and gross profit increased 57.1% to R560.9-million during the six months under review.
The acquisitions made during the year increased the company’s cost base by R78.9-million or 29.4%, while overall operating costs grew by 44% as the group significantly increased its investment in sales, marketing and advertising and expanded the head count to support the organic and acquisitive growth of the business.
During the first half of the year, Rhodes injected some R104.1-million in capital expenditure (capex), an increase on the R90-million in the corresponding period the year before, to expand capacity and enhance production at its meat production plant and fruit juice factory, said Henderson.
Capex of R150-million was planned for the second half of the financial year for the second-phase upgrade of the meat production facility, the phase two production increase at the fruit juice facility and kicking off the production capacity increase project at its pie facility.
“The recent acquisitions should perform strongly in the second half and entrench the group's position in the new categories of fruit juice, baby food, bottled salads and pickles, and bakery products,” he added.
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