A selection of the many food brands produced and sold by RCL Foods. The group is facing tough trading conditions in the sugar industry, while overall consumer demand also remained weak.
Image: Supplied
A major South African food producer says that in spite of all the positive economic news, consumers have not yet increased their spending on food products.
RCL Foods’ sales volumes remained subdued across most of its product categories, and headline earnings were down almost a third in the six months to December 31.
CEO Paul Cruickshank said in an interview that there has been a great deal of positive economic news (such as a lower inflation rate, low food inflation, and most recently a relatively favourable National Budget for consumers), but these have not yet translated into higher food consumption, “at least not for our products.”
RCL Foods is one of South Africa’s biggest food products groups, with brands such as Nola, Selati, Yum Yum, and Ouma. Its revenue was down 1,9% to R133 billion in the six months, and headline earnings per share fell by 30,6% to 75,8 cents. The interim dividend was lowered to 15 cents from 20 cents a share.
There has been no material improvement in demand in the two months after December, and the group expects demand to remain weak. “Consumer confidence remains negative, reinforcing a value-driven mindset as shoppers stretch limited budgets,” he said.
Looking to the remainder of the second half of their financial year, he said prevailing macroeconomic conditions are expected to continue.
The group’s financial prospects are expected to be further influenced by the sugar trading environment in particular, which is expected to remain highly volatile due to lower-priced sugar imports, the possibility of the government raising import tariffs, and an unknown outcome as yet to the rest of the sugar industry arising from the liquidation proceedings of Tongaat Hulett.
RCL Foods, with its Selati brand, is one of the top three sugar producers in South Africa, alongside Illovo Sugar and Tongaat Hulett. There is, for example, a Sugar Revenue Agreement that ensures that both growers and millers benefit proportionally from sugar price movements.
Cruickshank said the proceedings around Tongaat Hulett had created much uncertainty in the industry, and there were plans afoot as a sector to ensure there is at least enough sugar produced in South Africa to meet domestic demand in the event of Tongaat Hulett’s liquidation.
He said they were also working closely with the government and all parties on getting a higher sugar import tariff introduced “as a matter of urgency.” These talks started as long ago as October 2024.
The group 14,6% fall in underlying earnings before interest, taxes, depreciation and amortisation to R1,19bn was largely driven by the sugar division’s underlying result being down by R251m.
Increases in the sugar import duty were implemented in August and December 2025, based on the existing ineffective tariff formula. These increases were insufficient to protect against volumes of subsidised deep-sea imported sugar entering South Africa.
This trend is displacing local market sales and increasing exposure for local growers and millers to the significantly lower-priced export market, said Cruickshank.
“While the trading environment has been demanding, our focus for the period has been consistently on factors within our control, including net-revenue management and continuous-improvement initiatives. These efforts continue to support our ability to remain relevant from a pricing and market-share perspective, as well as driving operational performance,” said Cruickshank.
The group’s groceries business unit delivered a good underlying result in the six months. Production at a dry pet food plant was temporarily paused. This affected the ability to fully service demand towards the latter part of the current period and into the second half of the financial year.
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