RCL Foods in South Africa separates business to extract value

South Africa's RCL Foods will separate chicken, sugar and logistics businesses and is considering either a listing, disposal or joint venture in 2022
calendar icon 10 September 2021
clock icon 3 minute read

Reuters reports that RCL, which owns the Selati sugar, Ouma rusks and Rainbow chicken brands, has been reviewing its portfolio to assess whether it is configured to deliver sustainable earnings and value for shareholders.

Among the resulting conclusions, RCL has resolved to bulk up its fast-moving consumer goods business through acquisitions while separating its chicken, sugar and Vector Logistics into separate legal entities to operate in a pure play environment, Dally told investors.

The best options for each business will be determined in the next year or 18 months, Dally said, adding that the options to be considered include potential listings, joint ventures and disposals.

RCL has already separated the underperforming chicken business into a standalone division within RCL Foods and appointed a new management team. The division is expected to be a fully independent entity from the second quarter of the 2022 financial year, the company said.

"Each of those businesses are rightful leaders in their industries and we just think that they would do better in a different environment not under our umbrella," Chief Financial Officer Rob Field told Reuters.

The group is also investing in the plant-based protein market through its joint venture with U.S. LIVEKINDLY Collective. The deal allows RCL to expand the Oumph!, Fry's, LikeMeat and No Meat brands into Africa.

The South African plant-based protein market is forecast to account for 14 billion rand ($982.30 million) of a 208 billion rand total protein market by 2035.

The group also reported a more than eightfold increase in full-year headline earnings per share for the year to June 30, boosted by strong performances by its sugar, baking and grocery operations.

Shares in the company were up 16.1% to an 18-month high of 11.39 rand by 1114 GMT. ($1 = 14.2522 rand)

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