• RFG Holdings Limited reports strong financial performance in the first half of 2023, with group revenue growing by 10.2% to R3.8 billion.
• The company’s operating profit experiences a significant surge of 43.2% to reach R346 million during the same period.
• RFG Holdings also witnesses a notable increase in headline earnings, which rise by 37.1% to reach R217 million.

RFG Holdings Limited announced its consolidated financial results for the six months ending 2 April 2023. The company reported remarkable growth in revenue, operating profit, and headline earnings, driven by robust performances in both the regional and international sectors.

During the first half of 2023, RFG experienced a 10.2% increase in group revenue, reaching an impressive R3.8 billion, compared to the same period last year. The regional revenue displayed solid growth of 9.5%, while international revenue soared by an impressive 13.2%. The group’s operating profit witnessed a significant surge of 43.2%, reaching R346 million, with the operating margin expanding by 220 basis points to 9.2%.

RFG’s success can be attributed to factors such as price inflation of 14.8% and strong trading performances in both regional and international markets. However, certain product categories faced volume pressure due to sluggish consumer spending and a competitive business landscape.

Despite these challenges, RFG’s regional segment, comprising South Africa and the rest of Africa, focused on enhancing the operating margin through a delicate balance of price and volume. The company outperformed the market average in comparable categories, achieving revenue growth of 9.5%. Notable growth was witnessed in fresh foods, with an increase of 11.8%, and long-life foods, which grew by 8.2%. The pie category displayed a robust recovery from the sales and margin pressure experienced in the previous period.

RFG’s international revenue witnessed a remarkable growth rate of 13.2%. This growth was driven by strong international selling prices and the benefit of a weakened Rand, which outweighed a decline in volumes by 10.4%. In the prior period, the company had increased production volumes to meet heightened global demand following the failure of the Greek peach crop in 2021. Additionally, the weakening of the Rand against a basket of trading currencies contributed R92.0 million to the international revenue.

The operating profit for RFG surged by 43.2% to R345.8 million, resulting in an improved operating margin of 9.2%. The previous period had included one-off costs of R23.6 million relating to the Today acquisition, as well as insurance claim proceeds of R43.4 million for loss of profits during the Covid-19 lockdown.

While load shedding continued to impact production output and costs, RFG’s extensive investment in backup generators over the past seven years, coupled with efficient operational management, minimized the adverse effects on factory efficiencies. The company incurred diesel costs of R37.8 million for operating the generators during the six-month period.

RFG’s positive financial performance translated into increased headline earnings of 37.1%, reaching R216.8 million. Earnings per share rose by 37.0% to 83.3 cents, headline earnings per share increased by 37.7% to 83.2 cents, and diluted headline earnings per share surged by 37.5% to 82.9 cents.

Looking ahead, RFG anticipates that volumes in the regional business will continue to face pressure in the second half of the financial year due to weak consumer spending. The company remains committed to maintaining a focus on price and volume management to further strengthen margins in the regional segment.

RFG’s international business expects to sustain current pricing and demand for its canned fruit products. However, the company foresees lower shipment volumes in the second half compared to the previous year, as production returns to historical levels following increased production in response to higher global demand.

RFG plans to invest R280 million in capital expenditure for the full financial year. The investment will cover the expansion and replacement of generators, pineapple plantation projects in Eswatini, and capacity expansions at various facilities. Additionally, RFG aims to mitigate the impact of load shedding by accelerating its renewable energy program, with the installation of solar panels at production facilities.