JSE-listed food manufacturer RCL Foods has delivered solid results in the financial year ended June 30 despite softer consumer demand, with earnings before interest, taxes, depreciation and amortisation (Ebitda) having increased by 36.8% year-on-year to R2.3-billion.

Excluding material one-off items and accounting adjustments, RCL delivered underlying Ebitda from continuing operations of R2.2-billion – which is a 15.5% increase compared with the prior financial year.

Headline earnings per share (HEPS) amounted to 121.6c, marking a 31% year-on-year improvement, while underlying HEPS increased by 8.3% year-on-year to 127.7c.

Following the unbundling of its Rainbow Chicken business and the disposal of the Vector Logistics business, RCL’s remaining segments comprise groceries, baking, sugar and group.

The group declared a dividend of 35c apiece for the reporting year after having halted dividends during the Rainbow unbundling.

RCL reports that the pet food and sugar units within the groceries segment recorded a strong recovery in service levels and higher margins in the period under review. Volumes in the culinary unit, however, came under pressure, while the beverages unit also experienced a more favourable mix, lower stock returns and operational efficiencies.

The groceries unit reported a 22.6% year-on-year increase in underlying Ebitda to R497-million.

The company explains that the baking unit’s underlying Ebitda was lower year-on-year owing to a disappointing performance in bread, buns and rolls, which faced intense competition and margin pressure during the year. A significant increase in input costs for breads also necessitates a price increase that led to a decrease in salves volumes.

Underlying Ebitda in the baking unit declined by 5.8% year-on-year to R516-million.

Input cost pressure necessitated price increases of 6.8% on average across the groceries and baking segments in the year under review, which is below the 7.1% national average price inflation for food and beverages.

RCL assures shareholders that lower market demand was mostly offset by margin improvements enabled by the group’s savings initiatives, while lower loadshedding levels also assisted in achieving a positive performance.

The group has already noted an upturn in sales volumes in the last quarter of the financial year.

The sugar unit reported a significant improvement in underlying Ebitda on the back of higher prices in the local and export markets as well as improved production efficiencies having offset a higher molasses price. The sugar unit increased underlying Ebitda by 20.7% year-on-year to R1.27-billion.

“The resilience of the sugar unit has been substantially strengthened in the past year through ongoing operational improvements and cost-saving initiatives,” RCL states.

Looking ahead, RCL continues to carefully balance revenue, margin and profit while responsibly managing trade-offs.

RCL’s long-term strategy aims to create an enduring positive impact for its stakeholders, including by growing market share in its existing portfolio and leveraging consumer insights to invest in brands.