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RCL Foods expects a sharp drop in earnings for the year to end-June, with its sugar and pet food businesses bearing the brunt of softer trading conditions.
The weaker performance was “largely due to a significant decline in profitability” in its sugar business and associate Royal Eswatini Sugar, alongside a downturn in its pet food division, the company said in a trading statement on Monday.
The food producer said headline earnings per share (HEPS) from total operations are expected to fall 30%-35% from the previous year, while underlying HEPS, which excludes material one-off costs, is expected to fall 25%-30%.
Sugar came under pressure as a surge in deep-sea imports, amid a lack of effective tariff protection, eroded local market volumes and weighed on profitability, it said.
The imports contributed to a 10.3% drop in industry local-market volumes, forcing more sugar into the lower-priced export market. International raw sugar prices fell 22.6% on average, while a stronger rand further reduced export realisations.
The group said the gap between local and export prices averaged about R7,000 a tonne, highlighting the pressure created by having to sell more product into export markets.
“An effective tariff is crucial for the sustainability of the sugar industry,” the group said, adding the tariff matter remained unresolved with the International Trade Administration Commission.
Pet food was also under pressure after food-safety-related production disruptions constrained supply and resulted in higher stock write-offs. Sales volumes fell 20.5% from the comparative period.
The group’s Sunshine business was further hit by an impairment of goodwill and brands after profitability fell as the business struggled to recover volumes following the labour disruption at its Durban factory in December 2024.
Its culinary and baking segment provided some support, delivering “good performances” despite volume pressure across most product categories.
RCL Foods is due to release its full-year results on August 31.
Business Day
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