Rhodes Food plans payout on profit rise

Image credit: http://www.rhodesfoodgroup.com/

Directors of the recently listed group said that they planned to declare the first dividend for the financial year to September, payable early next year, based on a dividend cover ratio of three times diluted headline earnings per share.

Profit after tax soared 52.6% as the group increased market share in key product categories. There was also "significant growth" in wholesale and sub-Saharan African markets. Gross profit rose by 12.9% to R357m.

The international segment's revenue was negatively affected by a shift in the timing of export shipments compared with last year, and a rise in canned fruit volumes into the regional business.

The group's gross profit margin was constant at 27.6%, with an increase of 350 basis points in the regional segment offset by the lower margin in the international business.

Management said that it continued to target a gross margin above 30% in the medium term.

It said operating costs, excluding listing costs, grew 16.2% as it continued to increase investment in marketing and advertising, and to increase capacity in its commercial division.

The operating margin on a normalised basis, excluding listing costs, improved from 9.3% to 9.7% through the continuing turnaround at Bull Brand and further operating efficiency gains.

Capital expenditure showed a significant increase to R90m from R23m. This was invested mainly in fruit production facilities in Tulbagh and Swaziland, upgrading the meat production plant and installing and upgrading generators.