COMPANY RESULTS: Blackouts and high commodity input costs are biting into RCL’s profits

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RCL Foods, which owns the Yum Yum peanut butter, Ultra Pet, Rainbow Chicken and Selati sugar brands, says margins and volumes are under pressure due to persistently high agricultural commodity input costs and record levels of rolling blackouts, which ...

RCL Foods has also taken a pounding from industrial action in its groceries and baking business units, which was resolved, it said, “with due concern for employees’ welfare as consumers and a desire to limit potential food price increases”.

Still, it believes its results are resilient as revenue for the period under review had increased by 17.6% to R20.2-billion compared with the prior period, driven by higher pricing to offset those rising input costs, and higher volumes in its sugar, Rainbow and Vector Logistics divisions. “Whilst the fire at the Komatipoort site in October 2021 caused significant damage to the raw sugar warehouse, supply chain disruption was minimised. Insurance proceeds will fully cover the rebuild costs in the 2023 financial year.”

It is also committed to the process of separating Vector Logistics from RCL Foods. An RCL spokesperson said the manufacturer had lined up a potential acquirer for the Vector Logistics business and that negotiations were in an advanced stage.

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Margins yes. Greed margins too.

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