Resilient Revenue Growth In Weak Spending Environment

RFG delivered a resilient performance in the weak domestic trading environment, increasing revenue by 5.1% for the five months to February 2024.

CEO Pieter Hanekom said consumer spending continues to be impacted by inflationary pressures and high interest rates, while in the international business export shipments are being adversely affected by operating inefficiencies and congestion at the Cape Town port.

The group’s revenue growth was driven by price inflation of 7.9% as management continued to recover higher input costs.

Hanekom said regional revenue, covering South Africa and the rest of Africa, increased by 6.7% with price inflation of 10.8%.

“Sales volumes have remained under pressure due to constrained spending and increased competitor promotional activity, and declined by 5.7% which is in line with that reported for the second half of the 2023 financial year.”

“We expect volumes for the first half of the financial year to benefit from the Easter long weekend holiday period moving into March this year while it fell in April in 2023,” he said.

After reporting good revenue growth for the first quarter of the financial year to December 2023, sales of long life foods in particular slowed in January and into February.

The meat products category has sustained the turnaround reported in the previous financial year, with the vegetable and salads categories reporting an improved performance. The fruit juice and dry foods categories both delivered good growth.

In fresh foods, the pie category continued its recent volume growth momentum, with the ready meals category benefiting from the resilience of higher income consumers.

Hanekom said international revenue was down 3.7% due to softer global pricing, the decline in export volumes as a result of lower opening stock levels as well as challenges at the Cape Town port. Demand from international customers remains good and export shipments are dependent on overcoming the port challenges.

“The depreciation in the Rand against the group’s basket of trading currencies partially offset the lower volumes and contributed 6.8% to revenue growth,” he said.