Trading update for the 22 weeks ended February 2022 RFG Holdings Limited (Incorporated in the Republic of South Africa) (Registration number 2012/074392/06) Share code: RFG ISIN: ZAE000191979 (?RFG? or ?the group?) TRADING UPDATE FOR THE 22 WEEKS ENDED FEBRUARY 2022 Group revenue for the 22 weeks ended 27 February 2022 (?the period?) increased by 20.0%, with strong volume and turnover growth in both the regional and international segments. Margins came under further pressure due to significant increases in input costs, notably tin plate used in food cans, global commodities, raw materials such as meat and fats, as well as international freight costs. In the constrained consumer spending environment, it is proving particularly challenging to recover the higher input costs through price increases, with resistance from both retailers and consumers. In the first half of the 2021 financial year (?the prior period?), the group reported foreign exchange gains of R19.6 million and management expects to report a small foreign exchange loss for the first half of the 2022 financial year, owing to currency movements over the reporting periods. The results for the period include an additional trading week compared to the 21 weeks in the prior period. Excluding the impact of the 22nd week, group revenue increased by approximately 15.2%. Regional segment Turnover in the group?s regional segment increased by 16.1%, with volume growth of 14.0% and acquisitive growth of 0.9% (refer below). The main driver of growth was long life foods, where strong volume growth contributed to turnover increasing by 17.7% for the five-month period. The two best performing categories were fruit juice and dry foods. Fruit juice achieved high double-digit sales growth, due to robust volume growth, which contributed to increased market share in this highly competitive category. Dry foods also achieved strong sales growth, supported by good volume growth. Canned meat turnover declined, owing mainly to the impact of inflationary pressures, primarily in cans and mechanically deboned meat, which is mainly imported from South America, with prices more than doubling year-on-year. Long life foods sales into the rest of Africa grew by 12.0%, with continued good growth in fruit juice, dry foods and canned meat and vegetables. Fresh foods turnover increased by 13.4%. Volumes grew by 5.6%, with price inflation and mix changes accounting for 7.8% of the turnover growth. Ready meals continue to prove resilient in the weak consumer spending environment and achieved good volume growth. Pie sales recovered and the category recorded double-digit volume growth. However, meat price inflation and increased competitor activity continue to place pressure on margins. The turnover for the Today pie business has been included in these results for one month since the effective date of the acquisition on 1 February 2022. The business services South Africa?s top end retail market with well-known brands Today, Mama?s and Big Jack. While the acquisition is margin dilutive to the category, due to the current low margin profile of the Today product range, management is engaging with customers to adjust pricing in line with the rest of the category. The Today operation has been relocated from Atlantis in the Western Cape to RFG?s pie production facilities in Gauteng. The pie category should benefit from improved operational leverage following the consolidation of the Today pie business into the existing plants. The group expects to incur once-off acquisition costs of approximately R19 million in the first half of the 2022 financial year, including restructuring, relocation and severance costs. Loadshedding and related water supply interruptions continue to impact certain of the group?s facilities in Gauteng, resulting in lower production output, higher manufacturing costs and ultimately lost sales. International segment Strong demand for the group?s canned fruit products contributed to international turnover increasing by 44.1% as export volumes grew by 24.2%. The increased demand has been supported by the failure of last year?s peach crop in Greece, the world?s largest exporter of canned peaches. The good volume growth has been achieved despite the ongoing global logistics challenges and congestion at the Cape Town port which continues to create a shipping backlog. Shipping challenges have contributed to significantly increased sea freight costs since the start of the Covid-19 pandemic, while also impacting the group?s raw material imports. Global industrial fruit pulp prices are currently buoyant, while RFG continues to diversify its international sales and to expand into new markets. Impact of Russia-Ukraine conflict While the war in the Ukraine is expected to have a significant inflationary impact on global commodity and food prices in the months ahead, it is too early to assess the possible impact of the conflict on inflation, pricing and potential supply chain disruption. RFG does not import any raw materials from Ukraine or Russia and has no direct raw material sourcing exposure to the region. In terms of sales exposure, RFG?s export volumes to Russia have declined substantially in recent years. The financial information in this trading update is the responsibility of the directors and has not been audited, reviewed or reported on by the group?s independent external auditors. The group?s interim financial results for the six months to March 2022 will be released on the Stock Exchange News Service on 25 May 2022. Groot Drakenstein 17 March 2022 Sponsor Rand Merchant Bank (A division of FirstRand Bank Limited) Date: 17-03-2022 10:11:00 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. 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