Rhodes grows sales on market-share gains


Rhodes grows sales on market-share gains

Published Date: 2019-05-22 | Source: Stephen Gunnion | Author: Stephen Gunnion

Rhodes grows sales on market-share gains

The food producer says margins have weakened, partly due to lower international selling prices for its canned fruit after the recent drought.

Rhodes Food Group says low levels of inflation and the recent drought continue to put pressure on its profit margins. But the food producer, which makes everything from pies and pickles to juice and jams, and also helps to fill supermarket shelves with private label brands, has benefitted from recent weakness in the rand.

Reporting interim results, Rhodes said its brands, which include Rhodes, Bull Brand, Magpie, Bisto and Pakco, amongst others, gained or at least maintained market share in the six months to end-March. Its Long Life Foods segment benefited from strong performances in fruit juices, dry foods, canned vegetables and a recovery in the meat category. Fresh Foods grew sales by 1.9% on flat volumes, with its ready meals and pie category proving resilient in a tight consumer environment. It's also completed the turnaround at Ma Baker, the Pietermaritzburg pie producer it bought in 2016.

Turnover rose 93% to R2.7 billion over the period, with its African operations increasing by 8.8% as volumes rose by 7.3%. International turnover increased by 12.3%, benefitting from the weaker rand and growth in export volumes of 2.7%. Profit margins declined slightly due to lower international selling prices of deciduous canned fruit products due to drought-related quality issues. The group also faced once-off costs of about R14 million after relocating its pulps and purees plant from Wellington to Groot Drakenstein in the Western Cape. It said low levels of inflation put pressure on margins, although this was partially offset by tailwinds of around R22 million from the weakening rand.

Operating profit increased by 6% to R173 million, while headline earnings rose 2.1% to R84.1 million and diluted headline earnings per share increased by 2.2% to 32.1c.

The group said it expected a strong second-half performance despite consumer spending remaining under severe pressure in the months ahead.

Its shares rose 4.3% to R17 yesterday.

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