RCL’s earnings up 12%, driven by group’s sugar & baking businesses

RCL Foods, a leading South African food producer, has reported a 12% increase in headline earnings per share for the six months ending in December. The positive contributors to this growth were the Sugar, Baking, and Vector Logistics segments of the business, which saw an uptick in demand due to changing consumer habits during the lockdown period. However, the chicken division faced challenges that negatively impacted the overall performance of the company. In a recent interview with CNBC Africa, Miles Dally, CEO of RCL Foods, discussed the factors influencing the company's financial results and outlined strategies for overcoming the obstacles in the chicken business. Dally acknowledged that the breed issue in the chicken division was a significant problem that would take time to address. The company is working with major breed companies to improve genetics and expects it to take about a year to resolve the issue. The impact of this problem has been costly, with an estimated monthly expense of 20 million rand. The closure of quick-service restaurants during the lockdown further compounded the challenges faced by the chicken division, as demand plummeted when these establishments were unable to operate. To address these issues, RCL Foods has restructured its chicken business as a separate division reporting directly to Dally. This strategic move aims to provide dedicated focus and expertise to overcome the challenges and achieve sustainable performance in the chicken segment. The company has also enlisted the help of consulting firm R&B to assist with strategy development and potential acquisitions in the future. Despite the current challenges, RCL Foods remains committed to its purpose of 'more food to more people more often.' The company is evaluating its portfolio to identify opportunities for growth and enhance its market position. While no final decisions have been made regarding acquisitions or divestitures, RCL Foods is exploring various options to optimize its business operations and drive long-term value for shareholders.