JSE-listed food manufacturer RCL Foods has delivered solid financial results for the financial year ended June 30, with most segments having successfully managed through subdued market conditions and volume pressure in some categories.

The group reported earnings before interest, taxes, depreciation and amortisation (Ebitda) growth of 11.4% year-on-year to R2.56-billion, while underlying Ebitda from continuing operations – excluding material one-offs and accounting adjustments – increased by 7.9% year-on-year to R2.39-billion.

RCL explains some of the one-off and accounting adjustment items for the reporting period include R40.3-million of insurance proceeds for the Nkomazi Mill flood damage and adviser costs of R58-million related to the Rainbow Chicken and Vector Logistics disposals.

RCL’s headline earnings per share (HEPS) from continuing operations increased by 28.5% year-on-year to R1.56-million, while underlying HEPS from continuing operations increased by 14.4% year-on-year to R1.46.

The company’s total earnings per share, however, decreased by 1.3% year-on-year to R1.80 in the year under review.

Total HEPS amounted to R1.56, which marked a 10% year-on-year increase, enabling RCL to declare a total dividend of 60c apiece. This compares with a dividend of 35c apiece having been declared in the prior financial year.

RCL’s attributable profit for the year amounted to R1.6-billion, which is slightly lower than the attributable profit of R1.62-billion reported in the prior year.

The group’s continuing operations comprise the Groceries, Baking, Sugar and Group segments.

The company confirms that the Groceries segment delivered an improved result owing to a more favourable product mix in pet food, with more focus placed on premium brands, as well as results from continuous improvement initiatives, production efficiencies and reduced loadshedding.

The Groceries segment delivered 25% higher Ebitda of R630-million, compared with the prior financial year.

This while the Baking segment achieved a strong turnaround driven by all its operating units. The bread, buns and rolls operating unit, in particular, delivered a significant improvement in Ebitda despite modest volume growth of 1.3% year-on-year.

The Baking segment posted a 55% increase in Ebitda to R802-million in the year under review.

The Sugar segment reflected pressure in the second half of the year owing to reduced consumer demand and a substantial increase in imports in South Africa. However, RCL says the segment delivered a pleasing agricultural and manufacturing performance, particularly the Molatek operating unit, which had a favourable sales mix and improved operational efficiencies.

The Sugar segment’s Ebitda decreased by 22% year-on-year to R1.09-billion in the year under review.

On an underlying basis, Ebitda in the Groceries and Baking segments increased by 19% and 55%, respectively, to R592-million and R799-million, while the Sugar segment’s underlying Ebitda decreased by 24% to R963-million.

Some of RCL’s discontinued operations’ results in the year under review relate to a non-cash gain of R198-million realised on accounting for the unbundling of the Rainbow Chicken business, as well as a R7.3-million downward adjustment to the Vector Logistics profit on disposal.

The conclusion of the disposals allows RCL to focus exclusively on growing its core, future-fit and branded business that can deliver sustainable earnings and value for stakeholders.

“We continue to pursue opportunities for organic growth through innovation and taking advantage of gaps in the market, while remaining open to inorganic strategic opportunities for accretive growth, all enabled by our established business services platform,” RCL CEO Paul Cruickshank states.

Looking ahead, he expects consumer demand and confidence to remain somewhat subdued in South Africa despite moderation in food inflation recently.

Cruickshank also anticipates a continued challenging market for sugar owing to inadequate tariff protection and a softening world market price.

RCL will continue to drive efficiency improvement initiatives to enhance margins and remain competitive in a challenging trading environment.

“We are also pursuing opportunities to grow our export market share. We are also actively managing energy, water and logistics risks while advancing our climate response through improved resilience planning, low-carbon transitions and the development of a Scope 3 emissions inventory to inform future targets,” Cruickshank says.

He concludes these sustainability efforts support RCL’s ambition to drive long-term value creation, while remaining agile through evolving stakeholder expectations and emerging risks.