2017-09-20

RCL FOODS - avian influenza announcement


RCL FOODS confirms that an outbreak of the highly pathogenic H5N8 strain of avian influenza (AI) has recently been detected at the company's Heuningdal breeder farm in the Western Cape, situated between Malmesbury and Darling, after also having experienced a small outbreak at our Viva breeder farm near Muldersdrift in Gauteng.

The affected sites have been depopulated, and the loss amounts to approximately 5% of the company's total breeder stock. The cumulative direct costs associated with AI amount to approximately R26m, and the company is evaluating all opportunities to minimise the possible impact of this reduced volume.

AI has been spreading across South Africa, with over 50 reported cases since June 2017. AI is not known to affect humans, so there is no concern from a chicken consumption perspective.

Although containing the spread of the virus is proving difficult in South Africa, RCL FOODS will continue to relentlessly implement the strictest possible biosecurity measures at all sites to safeguard the health of its flocks. RCL FOODS is also working closely with government and other authorities in this regard.

2017-08-29

RCL final results June 2017


Revenue decreased marginally by 0.3% to R24.9 billion (R25.0 billion). Operating profit increased to R776.5 million (R317.2 million). Profit attributable to equity holders was higher at R515.7 million (R182 million). Furthermore, headline earnings per share came in at 63.5 cents per share (96.5 cents per share).

Dividend
The directors have resolved to declare a final gross cash dividend (number 85) of 20 cents per share bringing the total dividend declared for the year ended June 2017 to 30 cents per share (2016: 30cents).

Prospects
RCL believe that economic growth will continue to be lacklustre in the coming year, which implies that demand will remain constrained, with flat to declining volumes. On the positive side, the record maize crop, as well as improved supply of other crops should help to restore margins and contribute to welcome price relief for consumers. The Chicken business unit is expected to achieve significant improvements in profitability relative to the past financial year, due to the revised business model as well as lower input costs. Production volumes in Sugar should improve on the back of renewed irrigation, although the increasing trend in sugar imports and its impact on local sugar prices remains a major concern and places Sugar"s 2018 performance at risk. Groceries has a good pipeline of innovations. A strong focus will also be placed on capitalising on opportunities that will become available as a result of the new plant and equipment coming into operation at the UHT and pet food plants.

Logistics will focus on operationalising the recent contract wins, pursuing further opportunities to replace the business that was lost through Chicken"s restructuring, and the implementation of a number of cost containment initiatives. In addition, the Logistics division will look to capitalise on its new brand positioning launched in June 2017, which reflects a spirit of innovation and a desire to "go beyond" simply logistics and supply chain. Further internal opportunities in synergies, overhead savings and production efficiencies that flow from our "ONE RCL FOODS" initiatives will continue to receive substantial focus. The outcome of the chicken industry"s crisis remains uncertain, but substantial work has been done between government and industry to find a sustainable solution. RCL remain confident in our strategy and are making steady progress towards our goal of a diversified food portfolio, focused on adding higher margin, added value products and categories.

2017-08-29

RCL final results June 2017


Revenue decreased marginally by 0.3% to R24.9 billion (R25.0 billion). Operating profit increased to R776.5 million (R317.2 million). Profit attributable to equity holders was higher at R515.7 million (R182 million). Furthermore, headline earnings per share came in at 63.5 cents per share (96.5 cents per share).

Dividend
The directors have resolved to declare a final gross cash dividend (number 85) of 20 cents per share bringing the total dividend declared for the year ended June 2017 to 30 cents per share (2016: 30 cents).

Prospects
RCL believe that economic growth will continue to be lacklustre in the coming year, which implies that demand will remain constrained, with flat to declining volumes. On the positive side, the record maize crop, as well as improved supply of other crops should help to restore margins and contribute to welcome price relief for consumers. The Chicken business unit is expected to achieve significant improvements in profitability relative to the past financial year, due to the revised business model as well as lower input costs. Production volumes in Sugar should improve on the back of renewed irrigation, although the increasing trend in sugar imports and its impact on local sugar prices remains a major concern and places Sugar"s 2018 performance at risk. Groceries has a good pipeline of innovations. A strong focus will also be placed on capitalising on opportunities that will become available as a result of the new plant and equipment coming into operation at the UHT and pet food plants.

Logistics will focus on operationalising the recent contract wins, pursuing further opportunities to replace the business that was lost through Chicken"s restructuring, and the implementation of a number of cost containment initiatives. In addition, the Logistics division will look to capitalise on its new brand positioning launched in June 2017, which reflects a spirit of innovation and a desire to "go beyond" simply logistics and supply chain. Further internal opportunities in synergies, overhead savings and production efficiencies that flow from our "ONE RCL FOODS" initiatives will continue to receive substantial focus. The outcome of the chicken industry"s crisis remains uncertain, but substantial work has been done between government and industry to find a sustainable solution. RCL remain confident in our strategy and are making steady progress towards our goal of a diversified food portfolio, focused on adding higher margin, added value products and categories.

2017-08-17

RCL - trading statement


Shareholders are advised that RCL FOODS expects that its headline earnings per share (“HEPS”) for the year ended June 2017 is expected to be between 57.5 cents (-41.6%) and 67.5 cents (-31.5%) when compared to the reported HEPS of 98.5 cents for the corresponding year ended June 2016.

Earnings per share (“EPS”) for the year ended June 2017 is expected to be between 57.0 cents (+133.6%) and 61.0 cents (+150.0%) when compared to the reported EPS of 24.4 cents for the corresponding year ended June 2016, largely related to the Milling impairment in the prior year referred to below.

Restatement of June 2016 results
The prior year results have been restated for the impact of the change in the accounting standards relating to the treatment of bearer plants (IAS16 and IAS41), which has reduced the reported June 2016 HEPS by 2.0 cents and EPS by 3.3 cents.

HEPS for the year ended June 2017 is expected to be between 57.5 cents (-40.4%) and 67.5 cents (-30.1%) when compared to the restated HEPS of 96.5 cents for the corresponding year ended June 2016.

EPS for the year ended June 2017 is expected to be between 57.0 cents (+170.1%) and 61.0 cents (+189.1%) when compared to the restated EPS of 21.1 cents for the corresponding year ended June 2016.

Material once-off items The financial results have been impacted by material once-off items in both the current and corresponding period, further details of which will be included in our results announcement to be released on SENS on 29 August 2017. These items relate to:
• Impairments in the current period of R123,8 million (post tax) in the Chicken business unit relating to redundant plant and equipment identified as part of the decision to reduce commodity chicken volumes and from the related decision to dispose of the Tzaneen chicken operation. The impairments are excluded from HEPS, whilst the impact on EPS is a negative 14.3 cents;
• The recognition in the current period of R37,4 million (post tax) in restructuring costs and fair value adjustments on biological assets, also associated with the decision to reduce chicken volumes. The impact on HEPS and EPS is a negative 4.3 cents;
• An insurance receipt in the current period relating to the Pongola silo which was damaged in July 2015, with R84,8 million (post tax) related to the assets portion of the claim and R20,8 million (post tax) relating to prior year business interruption. The impact on HEPS is a positive 2.4 cents and a positive 12.2 cents on EPS;
• A foreign exchange loss of R27,9 million relating to the settlement of the Zam Chick Ltd ("Zam Chick") and Zamhatch Ltd ("Zamhatch") options in the current year, with the prior year including a R67,7 million gain (R118,9 million headline earnings gain) related to the accounting for the exercise of the options. The impact on EPS and HEPS for the year ended June 2017 was a negative 3.2 cents. The impact on HEPS and EPS for the corresponding year ended June 2016 was a positive 13.8 cents and 7.8 cents respectively;
• The release of a R163,3 million provision in the prior year for uncertain taxation disputes raised as part of the Foodcorp acquisition. The impact on HEPS and EPS in the June 2016 results was a positive 18.9 cents;
• An impairment loss in the prior year of R568,5 million (post tax) relating to the Milling operation in the Sugar & Milling division. The impairment is excluded from HEPS, whilst the impact on EPS in the June 2016 results was a negative 65.9 cents.

Excluding the above once-off items, normalised HEPS for the year ended June 2017 is expected to be between 64.0 cents (+0.3%) and 74.0 cents (+16.0%) when compared to the restated normalised HEPS of 63.8 cents for the year ended June 2016.

The improvement in the underlying results over the corresponding year is attributable to the recovery in the Sugar business unit on the back of the higher industry pricing and better channel mix, as well as the turnaround within the Millbake business unit with the Gauteng bakeries returning to profitability.

As previously announced, RCL FOODS downsized its Chicken business unit to restore its profitability by limiting production of consequential commodity products. From 1 February 2017 the Chicken business unit's Hammarsdale operation was reduced to a single shift, thereby eliminating a portion of loss making IQF (Individually Quick Frozen) product. The new business model has shown positive early results, with the Chicken business unit expected to report an EBITDA profit for the year, after posting a trading loss in the interim results to December 2016.

The Group's financial results for the year ended June 2017 are expected to be released on SENS on 29 August 2017.