RFG Holdings reports revenue growth despite domestic and international challenges

RFG Holdings, the packaged foods group with iconic brands such as Bull Brand, Pakco, Magpie and Rhodes Quality, posted a modest revenue uptick of 2.1% to R3.1 billion for the five months ended February 2025, a period marked by resilient domestic demand and bruising setbacks on the global stage.

In a trading update, released on Monday ahead of its interim results due on May 21, RFG stated that its Regional segment turned the tide in its home market, with a 5.6% revenue rise,  boosted by an 8.7% surge in volumes - a reversal from the 5.7% decline seen in the prior comparative period.

Fresh foods led the charge, with ready meals and pies finding favour among South African shoppers. Long life categories like fruit juice, dry foods, and pulps and purees notched double-digit revenue gains, thanks to last year’s launch of a fruit nectar juice range. Yet, not all was smooth: price deflation of 0.6% tempered gains, a shift from the 10.8% inflation of the previous period, while canned pineapple shortages and flagging canned meat sales, hit by price resistance and heavy promotions, dragged on performance.

However, the international segment told a grimmer story. Revenue plunged 19.1%, driven by a 15.4% slump in export volumes. The trouble began when a slew of canned deciduous fruit contracts fell apart, forcing RFG to redirect orders to alternative markets at cut-rate prices. Drought in Eswatini from the last financial year compounded the woes, slashing pineapple yields and quality, leaving stocks thin. A stronger Rand shaved off another 2.1% from turnover, while selling prices deflated by 1.5%. 

Looking ahead, RFG said the trading momentum in the regional segment is expected to continue into the second half of the financial year.

"Consumer spending is likely to remain constrained in the short-term, despite the recent interest rate relief, lower levels of inflation and improving consumer confidence. Management remains focused on effective volume and margin management to maintain the regional operating profit margin at the targeted 10% level," the group said

In the international segment, lower revenue and price deflation has resulted in margin pressure and the group does not expect to meet its operating profit margin target guidance for the first half.

Despite this, internationally recovery is in sight, RFG flagged.

From March, canned deciduous fruit shipments - both prior season leftovers and new harvests -are set to ramp up, targeting alternative buyers to claw back lost ground. Inventory should stabilise by year-end. Product from the new canning season will gather momentum from March and over the remainder of the financial year, the group also said.

In Eswatini, better weather promises a return to normal pineapple quality and yield as the harvesting of the new crop commences this month.

"The global pineapple shortage has resulted in higher pricing and stronger demand which should support the recovery in the turnover and profitability of the Eswatini operation in the second half," RFG said.

RFG's share price at 10am on Monday was  1.79% lower at R1 861.

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