Bull Brand owner RFG expects its annual earnings to fall by as much as 24% due to sustained pressure in its canned meat business and weaker international demand for fruit products.
The food producer on Wednesday told shareholders that headline earnings per share are forecast to decline 8%-13% to as much as 204.4c.
The group said the drop was largely driven by difficulties in its regional segment where rising input costs and subdued consumer spending have dampened sales. Demand for canned meat, one of RFG’s long-standing product categories, has also weakened as cash-strapped consumers cut back on spending.
“Pressure on canned meat volumes driven by sustained high input costs and moderated demand from constrained consumers in response to higher prices resulted in lower revenue and reduced margins. Consequently, an impairment loss of R105m has been recognised against this business unit,” RFG said.
While the international segment fared better in the second half of the year, the group said global trading conditions remained challenging. An oversupply of deciduous fruit products led to weaker global demand, pushing prices lower and squeezing profit margins further. A stronger rand also hurt export earnings.
“[These factors] contributed to a decline in the profitability of the segment relative to the prior period.”
The update highlights how the company, best known for its Rhodes, Bull Brand and Magpie brands, has come under pressure from both domestic cost inflation and global market softness, despite efforts to stabilise performance in the second half. RFG’s results follow a tough year for food manufacturers battling high agricultural input costs, electricity tariffs and muted consumer spending.
However, the highly expected merger with Premier is expected to be RFG’s saving grace. Premier in October announced plans to acquire RFG in a share-swap deal that will create a food powerhouse with nearly R30bn in annual sales, bringing it within touching distance of Tiger Brands, the country’s long-time market leader with revenue of R37.7bn.
The offer values RFG at a 35%-37% premium and will lead to its delisting from the JSE once complete.
Opportune Investments CIO Chris Logan described the merger as “transformative”.
“Importantly, the RFG portfolio, focused on key fresh and long-life categories, complements Premier’s existing portfolio with little overlap. While it is a big deal for Premier, the envisaged combined annual revenue of Premier and Rhodes of R28bn will still be some way behind Tiger Brands’ R38bn,” he said.
The transaction still needs Competition Commission approval, though Premier said it was confident it would go through given their minimal product overlap and complementary categories.
RFG’s annual results for the year to end-September 2025 will be released on November 19.
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