Extreme weather hurts RCL's units

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Revenue grew 8% to R12.9bn and profit 20% to R716m.

RCL’s brands include Rainbow Chicken, Yum-Yum Peanut Butter, Mageu, Selati Sugar and Nola Mayonnaise.

Tuesday’s results were under the group’s new three division structure, which was created as part of its integration of the Foodcorp acquisition.

These are consumer chicken, grocery, beverages, pies and speciality business units; sugar and milling, which includes animal feed and Millbake; and logistics company Vector, which operates as a stand-alone business.

CEO Miles Dally said the firm had to adjust pricing this year across a range of its products to keep up with spiking food price inflation, which had been worsened by the drought and the weakening rand. The rise in input costs could not all be fully recovered, he said, and managing the effect of the inflation was "a live situation for us … we have to manage the negative impact."

Not all products were being equally affected by rising prices, and in some categories it was easier to match the rise in input costs with an increase in price, but in categories where there was a lot of competition — such as chicken, which Dally said was totally oversupplied — it was "a lot harder to do".

The chicken business, which was "going through one of the worst times ever", according to Dally, had reported lower earnings before interest, tax, depreciation and amortisation (ebitda) of R210.8m, from R249m a year before.

"The single biggest operational feature of the period being reported on has been the severe drought, which has ravaged large parts of SA … the drought has had a pervasive impact on the business during this period," the company said. "The increase in commodity input prices has been exacerbated by the substantial decline in the value of the rand, which more than off-set any benefit that may have been gained from the lower international oil price."

The best performing unit was the groceries unit, with ebitda growth of 37% to R290.7m. The sugar unit disappointed, with revenue flat at R7.6bn, while ebitda fell 10.4% to R473m.