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RFG Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 2012/074392/06
JSE share code: RFG
ISIN: ZAE000191979
('the group')
TRADING UPDATE FOR THE 11 MONTHS ENDED AUGUST 2020
The abnormal trading conditions which prevailed during the second half of the
group's 2020 financial year have been most challenging. While the group has
continued to report healthy topline growth, lockdown restrictions have impacted
three key categories in particular which has adversely affected operating profit.
Group turnover increased by 9.0% for the 11-month period ended August 2020
('the period').
Regional segment
Turnover in the regional segment (South Africa and the rest of Africa) increased
by 7.4% for the period, benefiting from the significantly increased demand for
long life foods during the national lockdown.
Regional long life turnover grew by 10.3%, with volume growth of 1.4%. Strong
growth was reported in dry foods, supported by the launch of the Hinds Spices
range in the first quarter. However, the growth in dry foods and the sustained
demand for canned food during the lockdown, particularly canned vegetables and
meat, was offset by a decline in juice volumes which were severely impacted for
the five months since the start of the lockdown mainly due to the restrictions on
entertainment and the closure of schools.
Fresh foods turnover increased by 2.7%, with volumes 4.3% lower than the prior
period. Ready meals volumes were largely sustained during lockdown. Pie sales
declined sharply from April to June owing primarily to the slowdown in
convenience and forecourt traffic during lockdown and compounded by
government restrictions on the sale of hot meals during certain stages of
lockdown.
While retail food sales have benefited from the higher home consumption levels
during lockdown, the food service channel has been significantly negatively
impacted.
The regional operating profit has been adversely impacted by sales mix, lower
juice and pie volumes, and increased operating costs due to the Covid-19
pandemic.
Once-off costs included Covid-19 related expenses of R7.6 million and R7.0
million related to the rationalisation of the KZN pie manufacturing facilities into
the Pinetown facility and the closure of the Pietermaritzburg facility.
International segment
International turnover increased by 15.9% for the period due to the 15.0%
depreciation in the Rand against the basket of trading currencies. While
international volumes have recovered since July, the marked slowdown in
canned fruit exports in the first half of the financial year contributed to volumes
being 1.2% lower for the period.
The canned fruit shipments previously destined for China in the first half of 2020
were successfully sold to other markets but at significantly lower margins than
those typically achieved in China.
Exports were further impacted by congestion at the Cape Town port in the early
months of lockdown.
While the depreciation in the Rand has had a positive impact on top-line sales
and profitability, this benefit was partially negated by the hedging impact of
forward-exchange contracts which were at a lower exchange rate.
The financial information in this announcement is the responsibility of the
directors and has not been audited, reviewed or reported on by the group's
independent auditor.
The group's annual financial results for the year ending 27 September 2020 will
be released on the Stock Exchange News Service of the JSE on or about 17
November 2020.
Groot Drakenstein
14 September 2020
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Date: 14-09-2020 09:00:00
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