RCL Foods (RCL) is a large producer of food, sugar products, and chicken in South Africa, owned 80.4% by Remgro. The company owns a number of very well-known South African brands such as 5 Star maize meal, Farmer Brown, and Yum Yum peanut butter. It competes with overseas imports of sugar, chicken, and other foods. The company was impacted by the listeriosis outbreak, which damaged the market for processed meats and caused costs estimated at about R158 million. Additionally, the company has been affected by the weak economy, low consumer spending, and high unemployment.
RCL Foods, through the SA Poultry Association, is petitioning the International Trade Administration Commission (ITAC) for an 82% increase in the tariffs on imported chicken. On 2nd December 2020, the company announced that Remgro had increased its stake by buying 100 million shares at R8.05 each. On 29th March 2023, the company announced that it had sold Vector Logistics for R1.25 billion.
In its results for the six months to 31st December 2023, the company reported revenue up 8.4% and headline earnings per share (HEPS) up 52.6%. The company said, "The Vector Logistics segment was classified as a discontinued operation during the second half of the previous financial year. Despite the negative impact of Avian Influenza in the current period, Rainbow delivered an improved result. Sugar's improvement was achieved, despite lower crop yields and largely attributable to higher market prices."
The company also announced that it would spin off and separately list Rainbow Chicken, which should positively affect the share. The share has been moving sideways and downwards since its peak on 9th February 2022. On 4th June 2024, the company announced that it would unbundle and separately list Rainbow Chicken. RCL shareholders will get 1 Rainbow share for every RCL share that they hold on 25th June 2024. We recommended waiting for a clear break up through the long-term downward trendline, which came on 30th April 2024 at 1050c per share. It has since moved up to 1090c.
Overall, RCL Foods appears to be in a period of transition and restructuring, which could position it well for future growth, especially with the unbundling and listing of Rainbow Chicken. However, potential investors should keep an eye on market conditions, especially the regulatory decisions regarding chicken tariffs and the overall economic climate.
RCL Foods, through the SA Poultry Association, is petitioning the International Trade Administration Commission (ITAC) for an 82% increase in the tariffs on imported chicken. On 2nd December 2020, the company announced that Remgro had increased its stake by buying 100 million shares at R8.05 each. On 29th March 2023, the company announced that it had sold Vector Logistics for R1.25 billion.
In its results for the six months to 31st December 2023, the company reported revenue up 8.4% and headline earnings per share (HEPS) up 52.6%. The company said, "The Vector Logistics segment was classified as a discontinued operation during the second half of the previous financial year. Despite the negative impact of Avian Influenza in the current period, Rainbow delivered an improved result. Sugar's improvement was achieved, despite lower crop yields and largely attributable to higher market prices."
The company also announced that it would spin off and separately list Rainbow Chicken, which should positively affect the share. The share has been moving sideways and downwards since its peak on 9th February 2022. On 4th June 2024, the company announced that it would unbundle and separately list Rainbow Chicken. RCL shareholders will get 1 Rainbow share for every RCL share that they hold on 25th June 2024. We recommended waiting for a clear break up through the long-term downward trendline, which came on 30th April 2024 at 1050c per share. It has since moved up to 1090c.
Overall, RCL Foods appears to be in a period of transition and restructuring, which could position it well for future growth, especially with the unbundling and listing of Rainbow Chicken. However, potential investors should keep an eye on market conditions, especially the regulatory decisions regarding chicken tariffs and the overall economic climate.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.