2019-03-04

RCL interim results December 2018


Revenue for the interim period increased to R13.265 billion (2017: R12.817 billion), operating profit lowered to R692.1 million (2017: R810.3 million), profit for the period attributable to equity holders of the company decreased to R579 million (2017: R663.4 million), while headline earnings per share came in at 54.8 cents per share (2017: 74.5 cents per share).

Dividend
The directors declared an interim gross cash dividend (number 88) of 15.0 cents (12.0 cents net of dividend withholding tax) per share for the six-month period ended December 2018.

Company prospects
We expect trading conditions to remain challenging due to South Africa"s poor economic outlook. The upcoming elections are likely to result in an extended period of uncertainty and the prospect of labour instability remains high. We expect that the poultry market will remain depressed whilst the market remains oversupplied and as commodity input costs continue to rise. Further volume and market share growth in Groceries will be challenging in a highly competitive market. The Consumer division will continue to focus on strong innovation, brand investment and efficiencies to optimise profitability.

The short-term outlook for Sugar remains challenged with the overhang of high levels of imported sugar still impacting the local market, despite the implementation of tariffs that are offering some level of protection for the industry. The negative impact of the Health Protection Levy on local market demand is expected to continue. The sugar industry has significant structural issues which require resolution to ensure long-term sustainability. Various SASA initiatives and engagements with relevant industry participants are under way to find an optimal solution. We expect the good progress made in the first six months at Millbake to continue. Animal Feed will focus on regaining lost volume and margin.

The Logistics division is well positioned to offer customers a multi-temperature (including chilled, frozen and super-frozen) route-to-market supply chain solution. The new business won during the period under review bodes well for the remainder of the year and the focus will be on bedding down these opportunities.

Despite the expected economic headwinds, our strong balance sheet and cash flow generation positions us well.