RCL Foods’ headline earnings per share (HEPS) fell 32.8% to R1.05 for the year ended June 2026, as high sugar imports and production disruptions in its pet-food business weighed on earnings.
Revenue from continuing operations declined 4.1% to R24.50 billion following the disposal of Rainbow Chickens.
The company’s groceries division, which comprises culinary, pet food and beverages, reported a 3.2% decline in revenue to R5.2bn. Revenue from baking was broadly flat at R9.2bn, while sugar revenue fell 8.2% to R9.8bn.
“Sugar was negatively affected by high volumes of deep-sea imports, driven by ineffective tariff protection, which reduced local market demand and increased the proportion of production directed to lower-priced export markets,” RCL Foods said.
“In pet food, production disruptions constrained supply and the business’s ability to meet demand during the second half of the financial year.”
RCL Foods said its HEPS decline was within the guidance range it had previously provided. Despite the weaker performance, it increased its final dividend by 25% to 25 cents a share, bringing the total dividend for the year to 40 cents.
The company’s shares were 1.43% higher at R7.81 in mid-morning trade on the JSE on Monday.
RCL Foods also cited cautious household spending in South Africa, despite stabilising food inflation and lower interest rates than in previous years. Elevated inflation, high debt-servicing costs, weak real wage growth and higher fuel costs continued to constrain disposable income, it said.
Average international raw sugar prices declined by 22.6% from the previous year. RCL Foods said this, together with an ineffective sugar tariff, contributed to about 212,684 tons of sugar imports into South Africa, up 24.2% year on year.
The company said the import volumes and lower domestic realised sugar prices had “significantly impacted profitability across growers and millers” in the South African sugar industry.
Lower domestic sugar prices, high import volumes and depressed pet-food volumes weighed on RCL Foods’ earnings. The company also reported a materially lower share of profits from its associate, Royal Eswatini Sugar, which was affected by adverse sugar-market conditions in Eswatini.
“Despite the challenges faced during the year, we remained firmly aligned to our strategy of building a better-balanced, more branded business,” chief executive Paul Cruickshank said.
“We maintained a disciplined focus on operational efficiencies, ongoing innovation and continued investment in our brands, while remaining agile in responding to a complex operating environment.”
RCL Foods is reshaping its portfolio following the unbundling of Rainbow Chickens.
“In a testing year, our response across the business was to focus firmly on the factors within our control. We protected margins in categories under pressure and completed the agreed reshaping of our portfolio,” Cruickshank said.
The challenges facing RCL Foods’ sugar unit come amid efforts to revive Tongaat Hulett’s operations in KwaZulu-Natal.
RCL Foods said uncertainty in the sugar industry linked to Tongaat Hulett’s business-rescue process had “eased considerably in June 2026”, after new agreements were reached to continue the company’s business rescue.
In pet food, RCL Foods said it would implement a recovery plan focused on restoring customer confidence and rebuilding market share.
“We remain focused on the factors within our control. We have navigated difficult conditions before and are confident in our ability to continue adapting, executing and creating sustainable value for all our stakeholders,” Cruickshank said.
THE NATIONAL