RCL Foods has booked impairment charges after review

RCL Foods has booked impairment charges after review

RCL Foods, the major South African manufacturer, has announced another profit warning ahead of the planned publication of its annual results next week.

The company expects the headline earnings per share it generated in the year ended June to be between 11.2 and 16.2 South African cents, a decline of 57.2-70.4% on 12 months earlier.

In June, RCL Foods, home to brands including Rainbow chicken and Sunbake bread, then forecast a 30% fall in HEPS.

RCL Foods, in its new trading statement, issued on Friday (21 August), said the expected slump is "largely attributable to the negative impact of the Covid-19 pandemic and national lockdown".

It insisted: "Excluding this impact, RCL would have delivered a meaningful growth over the corresponding period. Importantly, RCL finished the current period in a strong cash position with healthy underlying cash generation."

On a reported earnings per share basis, the company is expecting to file a loss of between 101.8 and 104.3 cents due to impairment charges filed after a review of assets. A year earlier, the group generated EPS of negative 12.7 cents.

RCL said it carried out the review in the wake of the "impact of the pandemic on global economies", which it said had "exacerbated in South Africa's case considering its already weak economic fundamentals". A total impairment of ZAR1.51bn (US$88.5m) has been recognised on "property, plant and equipment, goodwill and trademarks in the current period", the company added.