RFG Group – a JSE-listed food company with brands including Rhodes, Bull Brand, Ma Baker, and Bisto – says that Eskom’s frequent load shedding bouts have cost the group money, and it will look to further liberate itself from the grid in the coming months.
As has been the case for so many listed companies reporting their financial results in recent quarters, Eskom’s inability to keep the lights on is becoming a tangible burden on daily operations, and the ability to generate a profit worthy of shareholder expectations. And like many of its peers on the exchange, RFG has had enough and intends to invest in renewable energy.
Alexforbes chief economist Isaah Mhlanga said recently that Eskom’s prolonged stage 6 load shedding caused significant damage to the country’s economy, wiping as much as R4 billion from the country’s GDP daily.
Meanwhile, the state utility’s prognosis for its immediate future is not good as it again ramped up power cuts on Monday, following continuous breakdowns and shutdowns at its power stations.
South Africa has experienced 99 days of power cuts so far this year, according to Bloomberg calculations, and has suffered record outages with Eskom increasing rolling blackouts to 6,000 megawatts being taken from the national grid four times.
RFG said that the trading environment was impacted by load-shedding and related water supply disruptions in certain of its facilities in Gauteng. “This resulted in lower production output, higher manufacturing costs and lost sales.”
The group said it is investing in renewable energy infrastructure to reduce the impact of load shedding on the group’s production facilities, with solar installations planned for a further two sites in the months ahead. The group partnered with Energy Partners to complete a 928 KWp solar PV rooftop installation at its plant in Wellington.
RFG has 14 state-of-the-art production facilities and two farms – dairy and pineapple.
Despite the disruption, the group said that revenue for the 11 months to August 2022, however, it had increased by 21.2% after the group reported growth of 20.9% in the first six months of the 2022 financial year.
Revenue growth was driven by ongoing strong international demand for the group’s canned fruit and fruit puree products and a resilient performance in the regional segment against the background of the deteriorating consumer spending environment.
The food maker said it continues to experience significant inflationary pressures from higher input costs caused by rising global commodity prices, particularly in tin cans, meat and oils. “Management has made good progress in protecting margins by
recovering the increased costs from customers and consumers, but it is still proving challenging to fully recover cost increases in certain key product categories.
Comical timing of load shedding in South Africa – signs of an ‘unfixable disaster’
Read: More big companies are moving away from Eskom’s grid
