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RFG Holdings Reports Revenues Rise Despite Port and Power Challenges

Published September 21, 2023
9 months ago

RFG Holdings, the umbrella company behind market leaders such as Bull Brand, Magpie, Squish, and Hinds, has noted an increase in revenue for the 11 months ending in August 2023 despite a challenging trading environment. The difficult trade circumstances resulted from load shedding and operational issues at the Cape Town port, leading to a decrease in sales volumes.

In its latest trading update, the Western Cape-based food producer predicts a revenue increase of approximately 10%. This is largely attributed to a price inflation of 13.5% and impressive gains in recovering the high input costs amassed over the past two years.

However, with lower consumer spending and increased competitor promotional activity, the market presents significant challenges. Enduring volume pressure in some product categories caused an overall group volume decline of 7.7%.

The impact of volume declines was mitigated to some extent by foreign exchange gains, which contributed to 3.5% of revenue growth. Similarly, the acquisition of Today boosted revenue growth by 1.1%.

RFG continues to address operational pressures at the Cape Town port. The fluctuating service levels and bypassing shipping lines have posed significant challenges. Additionally, adverse winter weather has further inhibited port operations.

RFG has also worked on managing the impact of load shedding on its production facilities' efficiency. The company installed new and replacement generators at a cost of R14 million, allowing operations to function at full capacity during load shedding. Further, solar energy solutions have been installed at three of the company's production facilities with plans for further installations in the coming financial year.

Despite these challenges, RFG is optimistic, striving to maintain balance in the regional sector between pricing and volume. Alongside sustained growth in the pie category, double-digit revenue growth was seen in long-life foods, fruit juice, and dry food categories.

Meanwhile, canned fruit and vegetable categories still feel the pressures of weak consumer demand, high raw material and packaging costs, and a competitive marketplace. The international segment, however, witnessed a 6.7% revenue growth.

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