The food group will report a significant decline in headline earnings and a basic loss for the year due to hefty impairments.
RCL Foods has blamed an expected decline in full-year profit of as much as 70% squarely on the impact of Covid-19 and the national lockdown. Had it not been for the pandemic, it says it would have delivered meaningful growth for the year to end-June.
In an updated trading statement, the branded food producer said headline earnings per share (HEPS) were likely to be between 57% and 70% lower than the 37.9c reported last year. Following a detailed review of its assets, it also booked a total impairment of R1.51 billion, resulting in an expected basic loss for the year of between 101.8c and 104.3c per share, down from last year’s 12.7c loss. The impairment is excluded from its HEPS calculation.
The impact of the pandemic on global economies, exacerbated in South Africa’s case considering its already weak economic fundamentals, necessitated an evaluation of the carrying values of the Group’s assets for possible impairments,” RCL said.
RCL owns the Selati sugar and Rainbow and Farmer Brown’s chicken brands. It also has extensive groceries and baking operations that make everything from mayonnaise and peanut butter to pies, buns and rolls.
In a June trading statement, it said the lockdown had impacted its Chicken and Vector logistics operations due to the shutdown of the quick-service restaurant industry. After no activity in April, restaurants were allowed to sell food for home delivery only in May as the lockdown was eased to level four. From June, they were allowed to offer takeaways and drive-thru services.
The company said it finished the period in a strong cash position with healthy underlying cash generation.
It expects to release its results on 31 August. Its shares fell 4.4% to R8.80 on Friday.
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