Rhodes Food dishes up a tasty dividend


Rhodes Food dishes up a tasty dividend

Published Date: 2019-11-20 | Source: Stephen Gunnion | Author: Stephen Gunnion

Rhodes Food dishes up a tasty dividend

Baked beans was the fastest growing sales category last year, giving the food producer a welcome tail wind.

Rhodes Food Group has reported a strong rise in full-year earnings, helped by a recovery in its international operations and a weaker rand. The food producer has raised its dividend by more than a third.

The Western Cape-based food producer owns brands that include Rhodes, Bull Brand, Magpie, Squish, Bisto, Hinds and Pakco, amongst others. It also helps to fill supermarket shelves with private label brands, pies and ready meals, which it says proved resilient in the consumer downturn. This business was boosted in the second half of the year after it acquired RCL Foods' protein snack food business, which supplies Woolworths with items including meat balls and chipolata sausages. But it was long life foods that reported the best sales last year, with baked beans the fastest growing category.

Turnover rose 8.5% to R5.4 billion in the year to 29 September, in line with growth at its SA and rest of Africa operations, which contribute 80% of total turnover. Good growth in canned meats, fruit juice and dry foods resulted in sales growth of 9.2% at its long life foods unit. Fresh food sales increased by 7.3% on steady volumes. International turnover increased by 8.8%, assisted by the 7.7% depreciation in the value of the rand against the group's major trading currencies.

Operating profit jumped 25% to R392 million as its operating margin expanded by 90 basis points to 7.2%. Its international operating margin recovered to 3.4%, from -0.5%, as a result of the weak rand. It said profitability was materially impacted by the drought-related impact on costs and the quality of its canned fruit in the first half of the year.

Profit after tax increased by 40% to R216 million and diluted headline earnings per share rose 38% to 83.8. It's lifted its total dividend for the year by 37% to 27.9c per share.

The group said it was likely to maintain the current positive growth momentum in the year ahead, based on its recent strong turnover performance and the recovery in the international business, with an expected increase in the export of fruit snacks in cups to the US and higher canned fruit exports.

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