RCL Foods earnings fall 27% as sugar imports, pet food disruptions hit profit
RCL Foods says deep-sea sugar imports, weaker global prices and a pet food recall weighed on earnings, while groceries and baking delivered stronger performances.
SOUTH AFRICA – RCL Foods reported a sharp decline in earnings for the year ended June 2026, with challenges in its sugar and pet food businesses weighing on profitability despite improved performances in parts of its groceries and baking divisions.
Revenue from continuing operations fell 4.1% to R24.5 billion, while underlying earnings before interest, tax, depreciation and amortisation (EBITDA) declined 8.6% to R2.18 billion. Underlying headline earnings dropped 27.1% to R951.4 million, while headline earnings per share fell 32.8% to 105.1 cents.
RCL Foods said its sugar division was severely affected by high volumes of imported sugar, which displaced local sales and pushed more production into lower-priced export markets. The company attributed the pressure to ineffective tariff protection that allowed deep-sea imports to enter the domestic market.
“Sugar was materially impacted by deep-sea imports, enabled by ineffective tariff protection, which displaced local-market sales into the lower-priced raw export market, while pet food was constrained by food-safety-related production disruptions,” the company said.
The company added that due to the ineffective tariff, the sugar industry did not take any sales price increases in the local market during the current year, despite incurring inflationary input cost increases.
RCL Foods said the pricing gap between local and export markets averaged about R7,000 per tonne, significantly affecting profitability. Global sugar prices also declined, while a stronger rand reduced export revenue.
Industry local-market sugar volumes fell 10.3%, while export volumes increased 48.3% during the year.
The pet food business was also affected after Salmonella was detected in some dry pet food products, resulting in a nationwide recall, production disruptions and stock write-offs. The company said the disruptions constrained supply and its ability to meet demand during the second half of the financial year.
Within groceries, culinary and beverages delivered positive performances supported by operational efficiencies, improved product mix and volume growth.
The baking division also recorded stronger results, driven by manufacturing efficiencies and lower overhead costs. Bread, buns and rolls benefited from continuous improvement initiatives and disciplined pricing, while Pieman’s improved profitability through savings and innovation despite higher fuel and meat costs.
Milling remained under pressure from lower volumes and plant reliability challenges, while speciality products improved through operational efficiencies and expansion into new categories.
RCL Foods recognised a R206.1 million impairment in its Sunshine operations, which continues to struggle to recover volumes following labour disruptions at its Durban bakery in December 2024.
Looking ahead, the company said it would focus on continuous improvement, revenue management and innovation.
“Following the production disruptions experienced in pet food in the current year, our focus going forward will include executing the recovery plan and restoring customer confidence and market share,” RCL Foods said.
On sugar, the company expects revisions to the dollar-based reference price implemented in August 2026 to ease deep-sea imports and improve the balance between local-market and export sales.
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