South Africa’s RCL Foods‘ unbundling of its Rainbow Chicken business has moved forward with the poultry operation now listed separately on the Johannesburg Stock Exchange (JSE).
The Selati sugar, Sunbake bread and Yum Yum peanut butter brands owner is restructuring its portfolio in an attempt to improve its profitability.
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The spinning off of the Rainbow Chicken business will be completed with the distribution of newly-listed shares to RCL shareholders on a one-to-one basis. The shares will start trading on July 1.
The plan has been in the pipeline since 2021 when company veteran Paul Cruickshank was elevated to the CEO role and implemented a new strategy to focus on the grocery, including pet food, and baked goods segments.
RCL Foods, a branded and private-label manufacturer supplying the retail and foodservice channels, completed the sale of its Vector logistics business segment last August. The company backtracked on a plan to exit its sugar operations in 2022.
Under the Rainbow brand name, RCL Foods supplies fresh and frozen chicken, along with value-added products, to the retail and out-of-home channels.
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By GlobalDataPresenting first-half results in March through to the end of December, RCL Foods said: “Despite the negative impact of Avian influenza in the current period, Rainbow delivered an improved result due to the continued execution of the turnaround plan, which drove an improvement in agricultural performance and operating efficiencies, coupled with higher volumes and margins.
“The board is of the view that the unbundling of Rainbow will enable both businesses to pursue their respective growth ambitions, and investment theses, in a focused manner and with improved alignment on capital allocation priorities.”
Earlier this week, RCL Foods issued a fresh trading update covering the financial year to the end of June.
The group said it expects its headline earnings per share from total operations to be at least 75% higher than the 68.3 South African cents it generated last year. T
RCL Foods said the expected improvement is “driven largely” by Rainbow and its groceries business.
