RFG Revenue Up 10% Despite Slower Consumer Spending

RFG overcame challenging trading conditions to increase revenue by 10.0% in the 11 months to August 2023. Growth was driven by price inflation of 13.5% as the group continued to recover the higher input costs encountered over the past two years.

CEO Pieter Hanekom said slower consumer spending and increased competitor promotional activity created volume pressure in some product categories. “This contributed to group volumes declining by 7.7% relative to the prior comparative period.”

Foreign exchange gains and the benefit of the Today acquisition partially offset the negative impact of volume declines.

Hanekom said the rate of volume decline of RFG products slowed by 200 basis points to 6.0% compared to the 8.0% reported for the first half of the financial year. The group’s volume decline is lower than the market in the comparable categories.

Regional revenue for the 11 months increased by 11.0% with price inflation of 16.4% and volumes declining by 6.0%.

Hanekom said the pie category continued to perform strongly, supported by the growth of the Today business, while the ready meals category proved resilient in the constrained spending environment.

Fruit juice and dry foods recorded double-digit revenue growth. Volumes in the canned fruit and vegetable categories remain under pressure from weak consumer demand, high raw material and packaging costs as well as the competitive environment.

International revenue grew by 6.7% as strong global selling prices and the benefit of the weaker Rand were offset by the 12.9% decline in volumes. “Our production volumes were returned to historical levels this year following the increased production in the prior year to meet the higher global demand as a result of the Greek peach crop failure in 2021.”

Hanekom said export shipments are being impacted by operational pressures at the Cape Town port. Challenging winter weather conditions have also hampered the port operations.

RFG continues to manage the impact of load shedding on production facilities and operating efficiencies. The group’s 13 production facilities in South Africa are able to operate at full capacity during load shedding, with new and replacement generators having been installed this year at a cost of R14 million.

RFG has accelerated its renewable energy infrastructure programme in response to load shedding. Solar energy solutions have been installed at three production facilities and a further three installations will be completed this month. Four solar projects are planned for the 2024 financial year.