Resilient Regional Growth in Weak Consumer Environment

RFG delivered resilient revenue growth in its regional business in the 11 months to August 2024 in an environment of sustained pressure on consumer disposable income due to high electricity, food and living costs together with high interest rates.

Regional revenue, including South Africa and the rest of Africa, increased by 5.3% with price inflation of 8.1%.

CEO Pieter Hanekom said sales volumes were lower due to constrained consumer spending and competitor promotional activity in some product categories. “Pleasingly, the rate of volume decline slowed as the year progressed,” he said.

Fresh foods reported stronger revenue growth due to volume growth in the ready meals category and a solid volume contribution from the pie category. While sales of long life foods slowed in the five-month period from April to August compared to the first half of the financial year, the fruit juice and dry foods categories continued to deliver good revenue growth.

“Revenue growth has been supported by our increased focus on new product development, particularly in ready meals, dry foods and fruit juice, with the launch of the Rhodes fruit nectar juice range being well received by consumers.”

Hanekom said despite the continued pressure on sales volumes, management remained focused on driving profitable growth, recovering costs, generating operational efficiencies from recent capital expenditure and applying tight cost management to maintain the group’s 10% medium-term operating profit margin target.

Revenue in RFG’s international business declined by 11.3% due to softer global pricing and demand for canned deciduous fruit as well as lower volumes due to shipping delays at the Cape Town and Durban ports. The port congestion was compounded by extreme winter weather conditions in Cape Town during August, with the port delays currently averaging approximately three weeks. The depreciation in the Rand against the group’s basket of trading currencies had a 1.4% positive impact on revenue.

RFG’s total revenue increased by 1.4% for the 11 months and the group’s financial results for the year to September 2024 will be released on 20 November 2024.