RFG Foods is accelerating its renewable energy infrastructure programme in response to load shedding, with solar installations planned for a further seven manufacturing facilities over the next two years.
Solar energy has already been installed at the group’s fruit juice plant in Wellington and vegetable products factory in Limpopo.
The first of the seven new installations will be undertaken at the meat products facility in Krugersdorp and the Groot Drakenstein production hub adjacent to the group’s head office.
Skyrocketing diesel costs
CEO Pieter Hanekom said while RFG has invested in generators at its 13 production plants in South Africa over the past seven years, the diesel costs to operate generators totalled R32 million in the five months that ended February 2023. He said at current levels of load shedding, the average weekly diesel cost to run generators amounts to approximately R2 million.
RFG Foods, an internationally recognised producer of convenience meal solutions announced that group revenue for the first five months of the 2022 financial year increased by 7.4%, driven by price inflation of 14.7%.
“The deteriorating domestic consumer environment and competitor activity created volume pressure in some categories and overall group volumes declined by 11.0%, which was partially compensated for by 2.5% growth from the Today Pie acquisition.”
He said the group’s primary focus has been on improving the operating margin through an effective balance of price, volume and margin management. “At the same time, we are conscious of price increases negatively impacting volumes due to consumers being under severe financial pressure. We believe the volume decline is largely in line with the market in comparable categories.”
Good sales on long-life foods
Revenue in the group’s regional segment increased by 8.7% with price inflation of 16.0% and volumes declining by 9.4%.
The pie category delivered a strong all-around performance, recovering from the significant sales and margin pressure in the previous financial year due to high levels of inflation and restructuring costs. The performance was supported by the turnaround in the Today business following price increases to bring the margin more in line with the rest of the pie category.
Good sales growth was achieved in three of the key long-life foods categories. Fruit juice, the largest long-life category, achieved good volume growth with high double-digit sales growth and this has enabled the category to maintain margins. The dry foods and meat categories achieved good sales growth despite price increases during the period.
Pleasing progress
International revenue grew by 0.7% as strong international selling prices and the benefit of the weakening Rand were offset by the 18.8% decline in volumes of the high base in 2022 when production was increased to meet the higher global demand following the failure of the Greek peach crop in 2021.
On the trading outlook, Hanekom said management continues to make pleasing progress in improving margins in the regional segment by recovering higher input costs from customers in most product categories. “However, we are still experiencing inflationary pressures from higher packaging (cans and paper) and meat costs in particular,” he added.
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