RCL Foods chicken division breaks even

RCL Foods, one of the country's leading food producers, has recently announced that its chicken division has finally broken even after facing challenges from the avian influenza outbreak. The company's headline earnings per share have increased by 21.5 percent, and they have declared an interim dividend of 15 rand per share. In a recent interview with CNBC Africa, Paul Cruickshank, the CEO of RCL Foods, discussed the various factors that influenced the company's performance and shared insights on the challenges and opportunities ahead. Paul Cruickshank highlighted the difficult six months that RCL Foods has endured, as the company faced inflation, intense competition, and pressure on consumers. The main driving force behind the challenges was the significant increases in raw material commodity prices, particularly in soft commodities. These price pressures forced RCL Foods to implement price increases in the market. Despite these challenges, the company saw gains in market share and expressed confidence in the positioning of its brands in the current tough environment. When asked about the decision to maintain the dividend at the same level as the previous year, Cruickshank explained that the company is cautious about potential headwinds in the next six months due to commodity price pressures and overall uncertainty in the market. The high inflation environment and the significant pressure on consumers also factored into the decision to hold the dividend steady while monitoring the situation closely. The interview also touched upon the improved pricing in the chicken division and the overall price outlook for 2022. Cruickshank mentioned that while prices in the chicken category have seen improvement in recent months, the company anticipates further pricing pressure and price increases in the coming months. Additionally, the sugar division of RCL Foods delivered a strong performance, but recent changes in sugar tax regulations introduced uncertainty, which the company is closely monitoring. Regarding the impact of avian influenza on the company, Cruickshank acknowledged the significant costs incurred due to the outbreak. He highlighted that avian influenza has been a persistent challenge for chicken producers globally and emphasized the need for careful management of the issue. Looking ahead, Cruickshank identified consumer affordability and the potential impact on volume as the biggest risks for the coming year. The company plans to navigate price inflation by implementing short-term price increments and closely monitoring cost movements in the market. In conclusion, RCL Foods' resilience in the face of challenges such as inflation, intense competition, and avian influenza underscores the company's commitment to navigating uncertainties and delivering results for its stakeholders. As the CEO, Paul Cruickshank's strategic insights and cautious approach reflect a well-rounded strategy to address market dynamics and ensure sustainable growth for RCL Foods.