South Africa’s RCL Foods blames drought for sharp drop in annual profit.
JOHANNESBURG, Aug 29 (Reuters) – South Africa’s RCL Foods reported a 34 percent drop in full-year earnings on Tuesday, blaming rising competition and a severe drought, which pushed up input costs.
The group, which produces poultry, sugar and other foods, said southern Africa’s worst drought in decades had increased prices of the maize used to feed its chickens, hurting its margins.
That added pressure on the company, which announced in November that it would cut poultry production and staff numbers as part of a restructuring effort amid stiff competition from imports from Brazil, Europe and the United States.
It said its headline earnings per share for the year through June fell to 63.5 cents, from 96.5 cents a year ago.
Headline earnings per share is the main profit measure in South Africa and strips out certain one-off items.
RCL, which released the results after the market closed on Tuesday, said its outlook was improving as conditions were now much better.
Still, it cautioned that the domestic food market remained oversupplied.
"Poultry imports, and more recently, rapidly increasing sugar imports, have been adding pressure to domestic supplies," the company said.
(Reporting by TJ Strydom; Editing by Susan Fenton)