Western Cape-based food producer Rhodes Food Group is deepening its growth in the sub-Saharan Africa region, as the international market is marred by uncertainty.
Rhodes Food’s regional business accounted for 84% of total revenue in the six months to April as currency volatility and increased costs saw limited growth in its global business.
“The relative size of international had been diminishing as we have grown the regional side of the business at a faster rate. So [with] our strategy to grow the core fast-moving consumer goods component of our business, we will reduce our exposure to the international part of the business,” CEO Bruce Henderson said
“We are proud and committed to our international business, we will always look to achieve growth in that segment. But that will be outstripped by growth in regional,” he said.
Over the past two years Rhodes Food Group has been on an acquisition spree, acquiring Pietermaritzburg pie maker Ma Baker for R212m and Durban food producer Pakco for R200m, boosting the topline.
But the challenges in the international business, together with one-off integration and relocation costs for new acquisitions, contributed to the group’s operating profit declining 22% to R162m. Headline earnings for the six months to April 1 were 35% lower at R82m.
Turnover grew 16.6% to R2.5bn, with continued strong growth in the regional business and the benefit of recent acquisitions in the period.
Rhodes, which owns brands such as Rhodes, Bull Brand, Squish, Bisto, Hinds and Pakco, managed to grow regional sales 19.5% and 7.6% excluding acquisitions. International sales increased a marginal 3.6%.
“We’ve made some substantial investment of late and the onus is on us as management to get those new investments to work and then the results will speak for themselves,” Henderson said. But where the company expected to see growth, he said, it would be “a function of timing, as our costs become aligned with selling prices that should look after itself”.
In the past year to date, the stock has fallen 24.03%. It shed 2.33% to R17.60 on Tuesday.