RFG, whose products include canned goods, Hinds spices, juices and Today pies and pastries, says exports have been delayed by operational pressures at the Cape Town port.
“After initial signs of improvement earlier in the financial year, service levels have since deteriorated and shipping lines are bypassing the port if it is deemed too costly to dock due to the slower turnaround and waiting times,” RFG said.
Challenging winter weather conditions have also hampered operations at the port, with high winds and rain leading to delays or making access difficult.
The problems at ports go back to at least 2020 when Distell, the maker of wines such as Nederburg and drinks such as Savanna and Hunters — it has since been bought by Heineken — highlighted port issues that slowed its wine exports and got worse during the Covid-19 shutdown.
In 2020, MSC, one of the largest passenger shipping lines in the world, and Ocean Network Express said they would no longer include the port on their main Europe line due to long delays and higher costs.
RFG Holdings has reported higher revenue but lower sales volumes as the food producer hiked prices to try to recover higher input costs including greater spending on solar power and generators.
The company, valued at about R2.8bn on the JSE, said on Monday in a trading update for the 11 months to end-August that it continues to grapple with the “challenging” environment particularly because of constrained consumers, high inflation, interest rate hikes and greater competition.
Food producers in SA have had to increase what they charge for their goods as commodity prices such as maize have been high and diesel spend has also been increasing due to power constraints. But price increases often lead to consumers buying less food and thus a drop in sales volumes.
RFG joins food producers Libstar and RCL Foods in reporting a fall in profit and lower volumes in the high-cost environment.
RFG said its price increases of 13.5% helped revenue to grow 10%, but volumes sold were down 7.7%.
“The negative impact of volume declines was partially offset by foreign exchange gains, which contributed 3.5% to revenue growth, and the Today acquisition contributed 1.1% to revenue growth,” RFG said.
Revenue from the company’s SA and rest of Africa business segment, which generated 81.5% of revenue according to its latest financial results, grew 11% thanks to price inflation of 16.4% as volumes were down 6%.
“The strong performance of the pie category continued into the second half of the year, supported by the growth of the Today business. The ready-meals category again proved resilient in the constrained spending environment,” the company said.
“Long-life foods, the fruit juice and dry foods categories recorded double-digit revenue growth.”
It said canned fruit and vegetables faced weak consumer demand and were burdened with high costs for raw materials and packaging in an increasingly competitive environment.
The food producer has been hard hit by the effects of power cuts. It said in May that it was spending R2m a week to run generators to keep the lights on and had installed solar and other power sources to wean it off power from Eskom.
According to Monday’s update, new and replacement generators have been installed at a cost of R14m to enable all of RFG’s production facilities in SA to operate during rolling blackouts.
“The high monthly diesel costs have moderated in the second half of the financial year following the completion of the fruit canning season at the Tulbagh factory in May and lower levels of load-shedding in recent months,” the company said.
However, this respite is expected to be short-lived owing to the significant increase in the volume of load-shedding in the first two weeks of September.
The company expects to publish its annual results on November 22.
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