On Wednesday, RFG Holdings, a prominent South African food producer known for its Rhodes brand of canned fruits and juices, announced a significant 20.4% increase in its half-year earnings. This performance comes as the company adjusted its pricing strategies to offset heightened input costs that are affecting consumer goods producers worldwide.
In recent times, the global consumer goods sector has been navigating a challenging landscape due to soaring costs for raw materials, energy, and packaging. These challenges have been exacerbated by Russia’s invasion of Ukraine and ongoing pandemic-related supply chain disruptions, prompting companies like RFG to raise their product prices to maintain profitability.
For the six-month period ending March 31, RFG reported that its diluted headline earnings per share—a key profitability metric in South Africa—rose to 99.8 cents from 82.9 cents a year earlier. This growth in earnings per share reflects the company’s successful navigation through economic turbulence.
The group’s operating profit witnessed a robust 15.2% increase, reaching 399 million rand (approximately $22.05 million). This was accompanied by an improvement in the operating profit margin, which rose by 100 basis points to 10.2%, surpassing the group’s medium-term financial targets.
Despite a constrained consumer spending environment leading to a decline in sales volumes, RFG’s overall revenue grew by 3.2% to 3.9 billion rand. This revenue increase was primarily driven by a 6.9% inflation in pricing, according to the company. RFG’s management highlighted their strategic focus on revenue management and operational efficiencies as key drivers behind their ability to recover from inflationary pressures and boost profitability.
“Despite the pressures on sales volumes, it is gratifying to see that the group has enhanced its profitability by concentrating on revenue management, recovering from inflationary cost increases, and maximizing operating efficiencies,” said CEO Pieter Hanekom.
In terms of geographic performance, revenue from operations within South Africa and the rest of Africa saw a rise of 5.8%, bolstered by strong growth in fruit juice, meat products, and dry foods sales. However, international revenue, which makes up 16% of RFG’s total revenue, fell by 8.6%. This decline was attributed to weaker international pricing and decreased export volumes, further compounded by logistical challenges at Cape Town’s shipping port.
Looking forward, Hanekom expressed a focus on recovering sales volumes and addressing the backlog of export shipments delayed by port issues. “Our major focus moving into the second half of the financial year will be on volume recovery and managing the export shipment backlog caused by port delays,” Hanekom explained.
