RCL Foods Projects Over 75% Rise in HEPS, 125% in EPS for FY2024

RCL Foods Limited expects a strong financial performance for the fiscal year ending June 2024. The company projects significant increases […]

RCL Foods Limited expects a strong financial performance for the fiscal year ending June 2024. The company projects significant increases in both headline earnings per share (HEPS) and earnings per share (EPS). These results are driven by the performance of Rainbow and the Groceries segments.

Projected Earnings Growth

RCL Foods anticipates a notable rise in its HEPS and EPS. HEPS from total operations is expected to increase by at least 75%. This translates to an increase of at least 51.2 cents per share, compared to the 68.3 cents reported for the prior period.

Similarly, EPS from total operations is expected to surge by at least 125%. This indicates an increase of at least 86.6 cents per share from the previous 69.3 cents.

MetricPrior Period (June 2023)Expected IncreaseExpected Value (June 2024)
HEPS68.3 centsAt least 75%At least 119.5 cents
EPS69.3 centsAt least 125%At least 155.9 cents

Driving Factors

The anticipated improvement in headline earnings is primarily due to the performance of Rainbow and Groceries. Profits from the disposal of the Vector segment and insurance proceeds from fire damage at Komatipoort raw sugar warehouse also contributed.

Value-Added Business Division

The Groceries segment saw a recovery in Pet Food volumes following load-shedding challenges in the prior period. Improved margins further bolstered results. However, the Baking segment faces ongoing pressure due to competitive market conditions affecting the Bread, Buns, and Rolls unit.

The Sugar segment continues to perform well, benefiting from high international prices and strong operational efficiency.

Rainbow Performance

Rainbow’s EBITDA in the second half of FY2024 is expected to match the first half’s performance. Key factors affecting Rainbow’s financials include improved agricultural KPIs, cost control measures, and fluctuating consumer demand.

Positive Momentum

Despite weaker consumer demand, retail and wholesale volumes increased. The company managed feed costs through hedging and procurement strategies, despite rising maize prices due to dry weather conditions.

FactorImpact on Performance
Agricultural KPIsLower input costs
Cost Control MeasuresContinued benefits
Consumer DemandRetail and wholesale volumes increased
Feed CostsManaged via hedging and procurement strategies
External Feed BusinessImproved margins, but volumes pressured by AI

Upcoming Unbundling and Separate Listing

Rainbow is set to be unbundled and listed separately. The trading statement includes additional commentary on Rainbow’s performance, reflecting its imminent unbundling.

Containment of Avian Influenza

The Avian Influenza (AI) outbreak impacted the first half of the year but was largely contained thereafter. This containment contributed to a stable performance in the latter half of FY2024.

Discontinued Operations

The financial information provided includes both continuing and discontinued operations. Discontinued operations comprise the Vector segment and Rainbow segment. Continuing operations focus on the remaining RCL Foods business, primarily the Value-Added Business division.

Financial Results Announcement

RCL Foods will release its financial results for FY2024 on September 2, 2024. A further trading statement will be issued once there is more certainty regarding the expected HEPS and EPS ranges.

Director’s Responsibility

The financial information in this trading statement is unaudited. It is the responsibility of the company’s directors.

Conclusion

RCL Foods anticipates strong financial growth for FY2024, driven by strategic improvements and efficient management. Shareholders can expect detailed financial results in September 2024.


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