Rhodes impacted by Covid restrictions


Rhodes impacted by Covid restrictions

Published Date: 2020-11-18 | Source: Stephen Gunnion | Author: Stephen Gunnion

Rhodes impacted by Covid restrictions

While sales of pies and fruit juice have recovered, the food group says it will continue to feel the aftershock of the Covid-19 pandemic.

Rhodes Food Group (RFG) says Covid-19 will continue to impact its operations into next year as economic conditions deteriorate, unemployment rises and consumer spending remains under pressure. The food group will also continue to incur additional costs, mainly to protect the health of employees.

While many of its product categories were resilient during the lockdown, with strong demand for dry foods and canned groceries, others came under pressure. Fruit juice volumes declined due to restrictions on entertainment and the closure of schools at the height of the lockdown. Fresh Foods sales increased as ready meals performed well throughout the lockdown. But pies fell sharply from April to June due to government restrictions on the sale of hot meals in the earlier stages of the lockdown and the slowdown in convenience store shopping. As restrictions were relaxed, pie sales showed a pleasing turnaround, while juice sales also showed a recovery.

Turnover rose 8.3% for the year to end-September, with regional turnover up 6.6% and international turnover rising by 15.5%, supported by the weaker rand. However, it suffered net foreign exchange losses of R54.6 million for the year after gains of R24.1 million last year. Earnings before interest, tax, depreciation and amortisation (EBITDA) were 10.3% higher at R625 million. Diluted headline earnings per share increased by 3.1% to 86.4c and it raised its dividend by 3.2% to 28.8c per share. Cash generated from its operations came in 21.6% higher.

RFG said it planned to spend R250 million in the year ahead to install an additional fruit juice line and build a new warehouse and fruit juice facility at Wellington in the Western Cape. It will also invest in an additional filling line at its baby food factory in Groot Drakenstein and upgrade its bakery facility to accommodate the integration of its KwaZulu-Natal operations, which it's closing at the end of the month and consolidating into the Gauteng pie facility in Aeroton and its bakery products factory in Linbro Park.

The company's shares closed unchanged at R12.50 yesterday.

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