The share price of major food and logistics group RCL Foods rose by as much as 13.72% to touch R16.00 after the group announced its headline earnings per share were expected to increase between 15% and 27%, for the six months ended December 31 due to solid performances from all divisions.
The group expects HEPS of between 69c and 76c, compared to the reported HEPS of 59.7c in the same period in 2020.
In a trading statement Tuesday the group valued at R13.3bn on the JSE said earnings per share for the period are expected to climb up to be between 70c and 77c.
“The expected improvement over the comparative period is due to pleasing performances from all divisions and is also a function of the base effect of the higher direct costs associated with Covid-19 in the comparative period,” the group said in a statement.
Afrifocus equity analyst Tinashe Kambadza said the strong recovery of the business coupled with the further resumption of economic activity in 2022 may see the positive trend continue.
RCL’s share price was catapulted to its highest level in 2022 thus far at R16, before falling to R15.69. The last time the share price hit those highs was in February 2019.
Close competitor Tiger Brands was up 1.27% by midday Tuesday, trading at R177.22.
RCL, which owns the Selati sugar, Ouma rusks and Rainbow chicken brands, resolved in 2021 to bulk up its fast-moving consumer goods business through acquisitions while separating its chicken unit, sugar unit and Vector Logistics into separate legal entities.
Its underperforming chicken business, which was converted into a stand-alone division within RCL Foods with a new management team, is expected to be a fully independent entity from the second quarter of the 2022 financial year.
“A meaningful recovery in the chicken division should in time add to this turnaround,” Kambadza said.
The group entered the plant-based market in 2020 when it formed a joint-venture business with US-based vegetarian-foods supplier Livekindly Collective.
Financial results of the food manufacturer that produces a wide range of branded and private-label food products in various categories, ranging from staples to value-added high-end speciality offerings, are expected to be released on February 28.
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