Rhodes Food spent ZAR487m on capital expenditure last year

Rhodes Food spent ZAR487m on capital expenditure last year

South Africa-based Rhodes Food Group is ploughing more funds into its business as it seeks to further increase production capacity and boost brand share.

The Western Cape-based manufacturer of products ranging from meat pies to baby food and canned fruit is injecting ZAR1bn (US$80.1m) this time around to be spread over three years, the company said in conjunction with its six-month earnings release. In the 12 months ended last September, the owner of the Bisto, Pakco and Ma Baker brands spent ZAR487m on capital expenditure.  

Rhodes Food, which generates most of its revenues from local regional markets, said it plans to invest the funds in new facilities and to upgrade existing plants, namely to cater to new product categories. Projects include commissioning of a new baked beans production facility in Gauteng, an upgrading at Pakco and Ma Baker, as well as a new food technology laboratory and product development centre.

Earlier this month, the Johannesburg-listed firm reported a turnover of ZAR2.5bn for the six months ended in March, up 16.6% year-on-year. Sales growth in the regional business, which accounts for 84% of group revenues, came in at 19.5%. Excluding acquisitions, sales were up 7.6%.

The company went on a shopping spree in 2016, with the acquisitions of local food producer Pakco, pie maker Ma Baker, and Alibaba Foods Holdings, which makes eastern delicacies.

Commenting on the outlook, chief executive Bruce Henderson said he expects trading conditions to ''remain constrained''.

''Our strategy in this environment will be to drive organic growth, increase brand share and extract benefits from the recent acquisitions and major projects,'' Henderson said. ''We will maintain momentum in sub-Saharan Africa and expect to benefit from the addition of the Pakco brands to our product offering.''

He added: ''Our regional business continues to generate strong organic growth, Ma Baker is now profitable and we expect the international business to return to profitability in the second half of the year. We are focused on completing the current capital investment programme to generate returns for shareholders into 2019.''