RCL Foods' FY12/13 Profit Down 93.26% On Higher Feed Price
News: South Africa-based food company RCL Foods, formerly Rainbow Chicken, posted a 93.26% year-on-year decline in its profits to ZAR18mn (US$1.7mn) for FY12/13 ended June 30, compared with ZAR267mn (US$25.22mn) in the same period in 2012. The company's operating profit dropped 60% to ZAR166mn (US$15.68mn) during the period, down from ZAR414mn (US$39.01mn) in the same period of the previous year. The drop has been attributed to higher amortisation and depreciation as well as increased feed prices in FY12/13. However, sales increased 28.7% to ZAR10bn (US$944.44mn) during the year helped by the takeover of FoodCorp.
BMI View: We continue to hold a positive outlook on South Africa's consumer story, as the country's economy continues to recover post-recession. Private consumption is expected to be stable, rising 3.0% in 2013, paired with a growing population over our forecast period to 2017.Although the economic recovery has not been without challenges and will likely remain uneven, in our view, the consumer sector continues to hold up.