RFG Earnings Up 21% With Strong Gains In Market Share

Groot Drakenstein – RFG Holdings overcame weak domestic consumer spending to increase headline earnings by 20.7% to R262 million in the six
months to March 2024 as the group gained market share and expanded its regional and international operating profit margins.

The Western-Cape based food producer, which owns market-leading brands Rhodes, Bull Brand, Magpie, Squish, Hinds and Today, increased group
operating profit by 15.2% to R399 million as the operating profit margin improved by 100 basis points to 10.2%, exceeding the group’s medium-term target.

CEO Pieter Hanekom said the group’s revenue increased by 3.2% to R3.9 billion as sales volumes declined in the constrained consumer spending environment. “Our revenue growth was mainly driven by price inflation of 6.9% through the continued recovery of higher input costs.”

“It is pleasing that despite the pressure on sales volumes, the group improved its profitability by focusing on revenue management, recovering inflationary cost increases and maximising operating efficiencies,” he said.

Regional revenue, covering South Africa and the rest of Africa, increased by 5.8%, with long life foods revenue growing by 7.5% and fresh foods revenue by 2.9%.

“Our three largest long life product categories of fruit juice, meat products and dry foods continued to deliver good growth, and this was supported by improved performances in the canned vegetable and bottled salads categories. In fresh foods, the pie category continues to grow volumes while the ready meals category benefited from the resilience of higher income customers,” he said.

RFG’s regional operating profit increased by 19.7% to R327 million as the operating profit margin expanded from 8.9% to the targeted 10.0%. Hanekom
said margins are being supported by operating leverage from production efficiency gains from recent capital investment, notably the new canning
equipment and capacity expansion at the meat products plant in Krugersdorp.

RFG recorded strong market and brand share gains in several key product categories. Rhodes is now the number one brand in the jam category. The
group’s brands are the market leaders in jam, canned meat, canned tomato and frozen pies and pastry, and hold the number two positions in fruit juice, canned fruit, canned vegetables, baby food and spices, herbs and pepper.

International revenue, which accounts for 16% of the group’s total revenue, declined by 8.6% due to softer international pricing and lower export volumes, which was compounded by the challenges at the Cape Town port. The impact of lower sales volumes on revenue and operating profit was partially offset by foreign exchange gains. The international operating profit margin improved by 110 basis points to 11.5%.

RFG invested R200 million in its production facilities across South Africa and Eswatini in the first half of the year, including large-scale equipment upgrades and capacity expansion at the Tulbagh fruit products and Krugersdorp factories. Capital investment of R300 million is planned for the full financial year.

On the outlook for the second half of the year, Hanekom said consumer demand is expected to remain constrained due to inflationary pressure on consumers while interest rates are now only expected to start declining in the 2025 financial year. Consumer spending will be further impacted by recent commodity price increases and renewed load shedding could further dampen consumer confidence, he said.

“In this environment we aim to drive sales and brand share growth through an increased focus on product innovation, including entering the fruit juice nectar market following the success of the Rhodes brand in the 100% fruit juice market.”

Hanekom said customer demand for RFG’s canned fruit products in the international market remains strong. “Our major focus will be on volume recovery in the second half of the year and to reduce the backlog of export shipments caused by port delays,” he added.

Ends

Issued by Tier 1 Investor Relations on behalf of RFG Holdings
For further information contact
Graeme Lillie
Tier 1 Investor Relations
082 468 1507