RCL Foods warns of R1.5 billion in writedowns as Covid-19 bites

RCL Foods, which owns Rainbow Chickens and Selati sugar, has warned of a drop in profits and R1.5bn in writedowns of its businesses due an economic hit from Covid-19.

The group expects headline earnings per share (HEPS) in its year to end-June to fall as much as 70.4% from the prior period’s 37.9c.

HEPS strips out one-off items, including impairments, to give a better indication of underlying performance.

RCL expects its loss per share to widen to between 101.8c and 104.3c, from 12.7c previously.

The group said that, excluding the effect of the pandemic, it would have “delivered a meaningful growth over the corresponding period”.

“Importantly, RCL Foods finished the current period in a strong cash position with healthy underlying cash generation,” the statement read.

In afternoon trade on Thursday, RCL’s share was down 3.8% to R8.85, giving the group a market capitalisation of R8.3bn.