S.African food producer RCL profit drops 46% as sugar levy, feed costs weighs

JOHANNESBURG (Reuters) -South African food producer RCL on Monday posted a 45.7% drop in annual profit, hit by a levy raised by the country’s sugar regulator, rolling power cuts and unrecoverable feed costs in its chicken farming arm.

The company reported a headline earnings per share from continuing operations – the main profit measure in the country – of 60.6 cents for the year ended June 30, down from 111.5 cents a year earlier.

Its Vector Logistics segment was disclosed as a discontinued operation for the end of the 2023 financial year, therefore profits from continuing operations are a more precise measure for the year.

Like other industry participants, the maker of Ouma rusks and Rainbow chicken has had to bear the burden of a special sugar levy imposed by the South African Sugar Association to cover a shortfall after two industry players failed to oblige with business recuse proceedings.

RCL Foods said in July that the net impact of the special levies had amounted to 234 million rand (pre-tax) ($12.46 million) for the company.

Adding to the pressures of doing business has been South Africa’s worst rolling blackouts on record, forcing many industry players to dish out hundreds of millions of rand to keep operations afloat.

The company resolved not to declare a final dividend.

($1 = 18.7734 rand)

(Reporting by Tannur Anders; Editing by Jacqueline Wong and Rashmi Aich)