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EMASWATI CONTRIBUTE TO RFG’S E5.9BN TURNOVER

13/02/2021 23:09:00 BY MFANUKHONA NKAMBULE

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mfanukhona@times.co.sz

MALKERNS – Despite the fact that COVID-19 has ravaged economies all over the world, Rhodes Food Group (RFG), which has a strong presence in Eswatini, has recorded a E5.9 billion turnover.

RFG’s fruit processing facility is in Malkerns.

The group has been producing canned fruit products and jams since 1896. In 1999, the business was acquired by the shareholders of Swaziland Fruit Canners and renamed Rhodes Food Group.

In its report, RFG reported a resilient performance in the year to September 2020 as turnover increased by 8.3 per cent to a lump sum of E5.9 billion. This, the company said was despite the fact that COVID-19 impacted sales and profitability in the fruit juice and pie categories, and severely curtailing exports to China.

The report was released in November 2020.

Rhodes Food Group is an internationally recognised producer of convenient meal solutions for customers throughout South Africa, sub-Saharan Africa and in major global markets.

production

Based in Groot Drakenstein in the Western Cape, South Africa, RFG has a well-capitalised production base comprising 14 manufacturing facilities across South Africa and a fruit processing facility in Eswatini (formerly Swaziland).

All operations are well-located close to sources of raw materials and end markets.

The group’s brands continued to gain market share across core product categories in the past year, with the Rhodes brand being the country’s market leader in canned pineapple and canned tomato.

Rhodes is the number two brand in canned fruit, fruit juice, baby food, jam and canned vegetables.

Bull Brand is the market leader in corned meat.

The product range includes canned fruit, jam, vegetables and meat products, bottled salads, fruit juices, fruit purees and concentrates, dry packed foods, fresh and frozen ready meals, pastry-based products and dairy products.

It must be said that the Western-Cape based food producer, which owns market-leading brands Rhodes, Bull Brand, Magpie, Squish, Bisto, Hinds and Pakco, increased sales across South Africa and sub-Saharan Africa by 6.6 per cent, with international sales growing by 15.5 per cent.

While the depreciation of the Lilangeni or Rand boosted sales and profitability in RFG’s international business, the company said the benefit was negated by net foreign exchange hedging losses of E54.6 million and significantly lower exports of canned fruit to China.

It is stated in the report that these factors contributed to the group’s operating profit being unchanged at E392 million, with headline earnings 3.2 per cent higher at E227 million.

operations

The dividend was increased by 3.2 per cent to 28.8 cents per share. It is said that cash generated from operations increased by 21.6 per cent to E602 million.

On a very positive note, the Times SUNDAY realised that the group was able to reduce its debt by E238 million.

In a statement, Chief Executive Officer (CEO) Bruce Henderson said Covid-19 and the lockdown restrictions created an abnormal trading environment in the second half of the financial year.

“The lockdown impacted key product categories and sales channels, and resulted in higher costs, temporary factory closures and pressure on consumer spending,” said Henderson who sits on the Board of Directors.

It must be said that Henderson has been the CEO of Rhodes Food Group since 1999. He began his career with the Group at the Eswatini operations and led the acquisition of Rhodes Fruit Farms and resultant establishment of Rhodes Food Group.

He said sales of long life foods increased by 9.6 per cent, with strong growth in canned and dry foods. He explained that growth was offset by a decline in fruit juice sales, which were seriously impacted for five months during lockdown, mainly due to restrictions on entertainment and the closure of schools.

exports

He said the group exports long life foods into 12 countries in the rest of Africa where sales grew by 18.8 per cent. He said fresh foods sales grew by 1.7 per cent. “While ready meals performed well during lockdown, pie sales declined sharply from April to June due to government restrictions on the sale of hot meals in the earlier stages of lockdown and the slowdown in convenience store traffic,” he said.

On another note, he said international sales increased by 15.5 per cent owing largely to the depreciation of the Rand/Lilangeni against RFG’s basket of trading currencies. Owing to the outbreak of Covid-19, he said limited shipments were made to China in 2020.

He pointed to the fact that most of the shipments destined for China were sold in other markets at significantly lower margins. “Exports were further impacted by constraints at the Cape Town port during the first three months of lockdown,” he said.

Henderson said the three categories most impacted by Covid-19 had all experienced encouraging recoveries.

“Juice sales showed a turnaround in September and October, pie sales have made a pleasing recovery since lockdown restrictions were relaxed, while canned fruit export volumes to Asia have shown an improving trend since July,” he said.

RFG is planning capital investment of E250 million in the year ahead, including the installation of an additional production line and building a new warehouse at its fruit juice factory in Wellington, and an additional filling line in the baby food factory at the Groot Drakenstein production hub.

On the outlook for the year ahead, Henderson said that while Covid-19 would continue to impact the group into 2021 through slower sales due to the deteriorating economic conditions in the country and weaker consumer spending, compounded by rising unemployment in the country, the outlook was still favourable.