JSE-listed food manufacturer RCL Foods has delivered a solid performance for the six months ended December 31, having increased its earnings before interest, taxes, depreciation and amortisation (Ebitda) by 25% year-on-year to R1.54-billion.

The company attributes the earnings growth largely to gains made in its Groceries and Baking divisions, as well as a partial recovery of an additional levy raised by the South African Sugar Association.

Notably, the group’s results relate to its continuing operations – Groceries, Baking and Sugar, after unbundling its Rainbow Chicken business in July last year and selling its Vector Logistics business in March 2023.

RCL declared a gross cash dividend of 20c apiece for the six months under review, compared with its prior interim dividend of 16c apiece, marking a 25% year-on-year increase.

The Groceries unit also benefitted from a favourable product mix in pet food, improved margins resulting from lower raw material input costs, savings initiatives, production efficiencies and reduced loadshedding.

In turn, the Baking unit has benefitted from revenue management initiatives, lower input costs and reduced loadshedding, despite muted volumes in most categories.

Moreover, after consecutive years of record performance off a high base, the Sugar unit continued to deliver strong results, aided by continuous improvements in operational performance and reduced industry exposure to lower margin raw exports. However, this division currently has a less favourable sales mix and high input costs.

RCL’s underlying Ebitda, which excludes material once-offs and accounting adjustments, increased by 20.5% to R1.38-billion.

Headline earnings per share (HEPS) increased by 38% to 109.4c, while underlying HEPS increased by almost 29% to 99.8c.

RCL’s total earnings a share increased by 12.8% to 135.1c in the six months under review, while total HEPS increased by 35.4% to 109.4c.

The company also managed to refinance a R1.5-billion debt package that would have expired in December 2024.