Ouma Rusks Owner RCL Foods Sees 40% Earnings Surge Amid Strategic Restructuring

South African grocery, baking, and sugar producer RCL Foods has delivered a stellar financial performance, with earnings surging by nearly 40% for the six months ending December 2024. This remarkable growth comes on the back of a strategic restructuring that has allowed the company to focus on its core branded businesses, including the iconic Ouma Rusks.

The group reported headline earnings of R975 million, a 39.2% increase from R701 million in the same period last year. Revenue also climbed to R13.56 billion, up from R12.85 billion, while operating profit reached R1.2 billion. Shareholders were rewarded with a 39% rise in headline earnings per share to 109.4 cents, alongside a declared dividend of 20 cents.

Restructuring Pays Off

This is RCL Foods’ first set of results since its 2024 restructuring, which involved the disposal of Vector Logistics and the unbundling of Rainbow Chicken. The move allowed the company to concentrate on its stronger brands, such as 5Star Maize, Nola, Sunbake, Yum Yum Peanut Butter, and Selati Sugar. The baking segment was a standout performer, with earnings before tax increasing by R195 million, while the groceries segment saw an R88 million boost.

Despite a challenging economic environment for South African consumers, RCL Foods has managed to navigate these pressures by carefully managing price increases and leveraging favorable commodity prices, such as lower wheat and fuel costs. The absence of load shedding has also provided a tailwind for the business.

Ouma Rusks: A Market Leader

RCL Foods’ portfolio includes some of South Africa’s most beloved brands, with Ouma Rusks dominating the rusk market with a 60% share. Other popular brands like Bobtail, Catmor, and Ultra Pet have also contributed to the group’s stable market share and consumer relevance.

Sugar Sector Challenges

While the overall performance has been impressive, the sugar segment remains a challenge. Despite a 7.1% increase in revenue, underlying margins narrowed by 3.7% due to lower global prices and increased imports. RCL Foods is actively engaging with the Department of Trade, Industry, and Competition through the ‘Sugar Master Plan 2.0’ to address regulatory issues and seek a review of import duties.

The group has also welcomed a delay in changes to the Health Promotion Levy, commonly known as the “sugar tax,” as the industry explores diversification strategies.

RCL Foods remains optimistic about the future, particularly for its sugar business, but acknowledges the ongoing pressures on households. The company expects tough trading conditions in the short to medium term but is confident in its strong brand portfolio and strategic focus to drive continued growth.

As South Africa’s economy shows signs of recovery, RCL Foods is well-positioned to capitalize on its market-leading brands and operational efficiencies. With Ouma Rusks leading the charge, the company is proving that even in challenging times, a strong brand and strategic vision can deliver sweet success.

Follow Joburg ETC on Facebook, Twitter , TikTok and Instagram

For more News in Johannesburg, visit joburgetc.com