RCL Foods slumps 10% as sugar tax does big damage
By Karl Gernetzky - Aug 15th, 14:02
RCL Foods, which owns Rainbow Chicken and Selati Sugar, fell as much as 10.5% after warning it had written down its sugar unit by R761.9m as a result of a bigger than expected impact from the imposition of the government's sugar tax.
Headline earnings per share (HEPS) for the year to end-June are now expected to fall by between 54.5% and 66.9% compared to the prior period's 96.8c, the company said in a statement.
The imposition of the sugar tax had resulted in a higher proportion of production needing to be exported at low international prices, RCL said, resulting in the impairment of its sugar unit.
“The impact of the sugar tax is expected to result in a permanent reduction in local market demand that is significantly higher than initial estimates,” the company said.
The company also faces continued pressure on its chicken products, saying international dumping continued to drive marker oversupply, even as it faces higher feed costs.
In afternoon trade RCL Foods had pared its losses slightly, with its share trading 8.26% lower at R10, having earlier fallen to an intraday low of R9.75.Business Live
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