By Sfundo Parakozov
JOHANNESBURG (Reuters) – South African food producer RCL Foods said it will focus on providing affordable food to its consumers after reporting a 31% jump in full-year profit on Monday, as higher pricing offset the impact of weaker consumer demand.
RCL Foods said its headline earnings per share – a widely used profit measure – jumped to 1.216 rand ($0.0680) for the year ended June 30, up from 92.8 cents last year.
The group’s CFO Rob Fields told Reuters that the company was trying to shield consumers from inflationary pressures which have resulted in “demand destruction because people just don’t have the money to be able to buy basic foods”.
RCL Foods, whose brands include Selati sugar, Yum Yum peanut butter and Sunbake bread, said it responded to higher input costs by implementing price increases of 6.8% on average across the groceries and baking segments, slightly below the 7.1% national average food inflation.
It recorded a revenue increase of 6.8% to 26 billion rand driven by higher sales pricing, along with a strong performance in its sugar and pet food segments.
However, the baking business unit recorded a decrease in sales volumes after price hikes in bread, buns and rolls.
Fields said an expected interest rate cut this month, which would be the first in more than two years, would brighten the business outlook.
“We are mildly optimistic in terms of how things might turn out in the future, not only because of the internal changes in our business but also what’s happening at the macro-perspective,” he said.
In an earlier statement, RCL Foods CEO Paul Cruickshank said the company was “cognizant of the role we play in keeping South Africans fed and employed, and we will continue to prioritise affordability while safeguarding the sustainability of our business”.
RCL Foods declared a final dividend of 35 cents per share for the year ended June 30. Its shares were up 2% at 1112 GMT.
($1 = 17.8900 rand)
(Reporting by Sfundo Parakozov; Editing by Tannur Anders, Kim Coghill, Louise Heavens and Christina Fincher)
