Rhodes benefits from stockpiling


Rhodes benefits from stockpiling

Published Date: 2020-05-20 | Source: Stephen Gunnion | Author: Stephen Gunnion

Rhodes benefits from stockpiling

The food producer says its international segment was held back by reduced shipments to China and foreign exchange losses.

Rhodes Food Group says strong sales in March ahead of the national lockdown boosted its half-year numbers as customers stocked up on canned food. Ready meals and pies were also in demand. However, a slowdown in exports of canned fruit to China from early January following the outbreak of Covid-19 kept international turnover flat for the six months to end-March.

The food group says March sales alone were 22.2% higher than last year, with good growth in fruit juices and bakes beans and particularly strong sales in canned fruit, vegetables and meat. Limited shipments were made to China in the first quarter of 2020 and exports were further impacted by constraints at the Cape Town port in March, contributing to a decline of 11.5% in international volumes. The sudden weakening of the rand also weighed on the profitability of its international business as it resulted in net unrealised losses on forward exchange contracts.

Group turnover rose 9.6% as revenue from its African operations jumped 11.5% and international turnover increased by 0.5%. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 4.3%. The company booked net foreign exchange losses of R47.6 million after recording net gains of R14.1 million over the same period last year. That left operating profit 5.3% lower at R161 million, with its operating margin declining to 5.5% from 6.3%. Profit after tax declined by 3% to R77.8 million and diluted headline earnings per share fell 3.1% to 31.1c.

Rhodes said it generated 16.6% more cash from its operations to R138 million and it repaid term loans of R122 million, with its net debt to equity ratio improving to 55% from 58.9%.

Sales of long life food remained buoyant into the second half of its final year, with continued strong demand for canned fruit, vegetables and meat. However, fresh foods sales slowed mostly due to the restrictions on the sale of hot pies during the lockdown. It said its supply chain continued to function efficiently despite numerous Covid-19 related constraints. It expected the recent deterioration in the rand/dollar exchange rate to boost the profitability of its international operations in the period ahead.

Its shares rose 2.4% to R14.25 yesterday.

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