Breaking News on Global Meat Trading and Processing

Headlines > Financial

Read more breaking news



Growing poultry crisis sees RCL Foods’ profit fall

Post a comment
Oscar Rousseau

By Oscar Rousseau+


RCL managing director Scott Pitman marches with unions to protest EU dumping
RCL managing director Scott Pitman marches with unions to protest EU dumping

South Africa’s RCL Foods has warned that its half-year profits could fall by more than 50% as the massive challenges in the domestic poultry market send earnings tumbling.

The company expects its earnings per share (EPS) – profit made on each share – could fall by as much as 54% in the six months to 31 December 2016. RCL Foods, which claims to be South Africa’s largest poultry processor, said it expected EPS to fall by at least 37%, when compared on a like-for-like basis with the corresponding six months in the prior year.

The business has already been forced to cut over 1,000 jobs as the food group battles to rebalance its portfolio.

South Africa’s poultry industry has been under intense pressure over the past year, due to a combination of dumped imports and high feed costs. As a whole, the industry is now producing more chicken than South African consumers are buying.

Loss-making poultry

To combat this growing problem, RCL Foods has downscaled its operations and limited production. Its Hammersdale operations have been reduced to a single shift and more than 1,000 staff have now been made redundant.

Restructuring has cost RCL Foods ZAR140 million ($10.3m) in what it called “abnormal items”. This included tax impairments of redundant plant equipment, a tax provision and value adjustments on biological assets.

Away from the loss-making poultry operation, RCL Foods has had a markedly different performance, achieving trading profit growth despite foreign change volatility.

We continue to make progress in moving towards a more balanced portfolio, which is positioning us as a stronger, more diversified business that is geared for growth,” said RCL Foods CEO Miles Dally.

This is evident in the performance of the rest of our businesses, excluding chicken,” he added.

Dally noted that RCL Foods’ sugar and milling operations had performed well.

South Africa’s government has now launched a task force to end the chicken crisis. A number of recommendations around trade, financial support and competitiveness are expected to be made by the government in the coming weeks.

Post a comment

Comment title *
Your comment *
Your name *
Your email *

We will not publish your email on the site

I agree to Terms and Conditions

These comments have not been moderated. You are encouraged to participate with comments that are relevant to our news stories. You should not post comments that are abusive, threatening, defamatory, misleading or invasive of privacy. For the full terms and conditions for commenting see clause 7 of our Terms and Conditions ‘Participating in Online Communities’. These terms may be updated from time to time, so please read them before posting a comment. Any comment that violates these terms may be removed in its entirety as we do not edit comments. If you wish to complain about a comment please use the "REPORT ABUSE" button or contact the editors.

Related products

Related suppliers