RCL Foods, which is majority owned by Johann Rupert's Remgro, will not pay an interim dividend as it looks to preserve cash in a difficult environment that saw it battling load shedding, industrial action and rising inflation.
Reporting half-year results to December 2022 on Monday, the group, which owns Selati sugar, Yum Yum peanut butter, Rainbow Chicken, Pieman's and Epol pet food, among other brands, saw its underlying headline earnings per share fall more than a fifth even as its revenue rose by double digits.
The company's underlying earnings before interest, tax, depreciation and amortisation, which excludes material one-offs, fell 9.2% to R1.24 billion, while headline earnings per share dropped 22.4% to 56.4c. Revenue rose 17.6% to R20.2 billion.
Describing its results as "resilient" considering the country's challenging trading conditions, RCL said it experienced "sustained high commodity input prices, above-inflationary increases in other costs and unprecedented levels of load shedding". It said the dip in its results was mainly attributable to declines in its Rainbow and Baking divisions.
RCL said that because the separation of its Rainbow and Vector Logistics businesses was still in progress and the group was wrestling with these cited pressures, its directors "resolved not to declare an interim dividend in order to preserve cash while the group repositions its portfolio".
It said its groceries business "sustained its high market shares" but was hit hard by load shedding, which "particularly impacted service levels in the first quarter". At the same time, industrial action at its grocery and pie facilities also contributed to higher costs and production downtime.
RCL reported that volumes came under pressure in its baking division, largely due to price increases implemented to "counter high wheat and maize prices".
But its sugar business "produced a good result, aided by volume growth and higher prices, but partially offset by high energy and fertiliser costs".