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RCL FOODS LIMITED - Further trading statement - year ended June 2019

Release Date: 15/08/2019 11:00
Code(s): RCL     PDF:  
Wrap Text
Further trading statement - year ended June 2019

(Incorporated in the Republic of South Africa)
(Registration number: 1966/004972/06)
ISIN: ZAE000179438
Share Code: RCL
("RCL FOODS" or "the Group")


Shareholders are referred to the trading statement published on
SENS on 4 June 2019. RCL FOODS reported that it's headline
earnings per share ("HEPS") and earnings per share ("EPS") for the
year ended June 2019 ("current period") would be lower by at least
20% when compared to the year ended June 2018 ("comparative
period"), and that a further trading statement would be published
as soon as the Group had reasonable certainty on the expected HEPS
and EPS ranges for the current period.

Shareholders are advised that RCL FOODS expects its HEPS for the
current period to be between 32 cents (-66.9%) and 44 cents (-
54.5%) when compared to the reported HEPS of 96.8 cents for the
comparative period.

The expected decline is largely attributable to the challenged
performance of the Sugar and Chicken business units, as
highlighted in the trading statement published on 4 June 2019.

The Sugar business unit is expected to report a significant
operating loss for the year driven by lower local market demand,
primarly due to the implementation of the Health Promotion Levy
(sugar tax). This resulted in a higher proportion of production
having to be exported at low international sugar prices, adversely
impacting the business unit's sales mix and hence margins. The
impact of the sugar tax is expected to result in a permanent
reduction in local market demand that is significantly higher than
initial estimates. Due to the depressed sugar outlook, we have
performed a detailed impairment review on the assets of the Sugar
cash generating unit, resulting in a R761,9 million (R552,5
million post-tax) impairment on property, plant and equipment and
goodwill in the current year.

The difficult trading environment for Chicken has continued
unabated, with local volume and dumped imports driving market
oversupply and negatively impacting pricing amidst a rising feed
cost cycle.

Largely due to the Sugar impairment, which is excluded from the
calculation of HEPS, EPS for the current period is expected to be
lower than HEPS and between negative 8 cents (-107.5%) and
negative 18 cents (-116.9%) when compared to the reported EPS of
106.6 cents for the comparative period.

The Group's financial results for the current period are expected
to be released on SENS on 2 September 2019.

The financial information on which this trading statement is based
has not been reviewed and reported on by the Group's external

15 August 2019

RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Date: 15/08/2019 11:00:00
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