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Owing to the significant challenges facing the South African chicken industry, including imports and high feed input costs, food manufacturer RCL Foods expects its headline earnings a share for the six months ended December 31 to be between 40c and 55c, around 30% to 50% lower than the 87.2c it reported in the prior year.
Its earnings per share for the period under review were also expected to fall by between 48% and 65% to between 30c and 45c.
The interim results were also impacted on by an after-tax impairment of R102.7-million, excluded from headline earnings, for redundant plant and equipment related to the decision to reduce commodity chicken volumes.
Earnings were further impacted on by a R37.4-million after-tax provision for restructuring costs and fair value adjustments on biological assets; and a foreign exchange loss of R27.9-million as a result of rand/dollar appreciation, relating to the settlement of the Zam Chick and Zamhatch options.
However, the company noted that, excluding its chicken business’s performance, the balance of its operations are expected to show trading profit growth over the comparable period.
RCL Foods’ sugar business has shown improvement on the back of the higher industry pricing and better channel mix, while the turnaround within the Millbake business unit has progressed well, with the Gauteng bakeries returning to profitability.
The company pointed out that certain key brands within its groceries business have also continued to grow volumes in a competitive market environment.