Rhodes Foods more bullish on its outlook. The food producer says a turnaround at Ma Baker is progressing well while the

end of the drought in the Western Cape will return its international business

to profitability.

Rhodes Foods expects its international business to return to profitability

this year after it weighed on the group's full-year results.

The food producer says expert volumes are likely to continue to improve while

foreign selling prices of canned fruit should show a small increase this year.

The end to the drought in the Western Cape and the weaker rand should also

help its international business.

It's not just Rhodes' global business that has impacted its performance - the

integration of recently-acquired pie maker Ma Baker hasn't gone as smoothly as

expected, resulting in its regional operating margin declining to 7.8% from

9.7%. However, it says the turnaround in the performance of Ma Baker is a

priority and is progressing well. It has also faced rising interest payments

due to its increased capital investment programme and lower levels of cash

being generated owing to the lower profit over the year.

Group turnover rose 11.2% to 5.1 rand billion in the year to end-September, held

back by an 8.4% increase in international turnover. It said the reporting

period comprised 52 trading weeks compared to 53 weeks in the prior period.

Headline earnings dropped 32.9% to 159.1 rand million due to the weak performance

from its international operations, with diluted headline earnings per share

falling 34.9% to 60.8c. Its lowered its dividend by 34.7% to 20.3c per share.

The focus in the regional segment will continue to be on driving organic

growth, increasing brand shares and on improving margins," Rhodes said.

"Management aims to realise benefits from the recently and soon to be

completed capital projects which are expected to start yielding returns on

capital that was invested over the last two years."

Following the end of its reporting period, Rhodes said it had agreed to buy

the protein snacks business from RCL Foods for 30 rand million, subject to

regulatory approvals. The business producers protein snacks for Woolworths and

Rhodes will integrate it into its ready meals operation in Groot Drakenstein.

The deal is expected to become effective in April.

Its shares closed 3.2% higher at 15.48 rand yesterday.

> The food producing company Rhodes Food came out with their results today for

the FY18 and group turnover was up by 11%. Diluted HEPS is down by 34.9% and

dividend per share is down by 34.7% to 20.3 cents. #JMBUSHAInsights

>

> -- JM BUSHA Investment (@jm_busha) November 20, 2018