Rhodes Food Group finalizes Ma Baker pie acquisition amid strong domestic results

23-May-2017 - Last updated on 24-May-2017 at 11:30 GMT

South African Rhodes Foods has bought Kwa-Zulu Natal-based Ma Baker pies to strengthen its position in the grow pie market. Pic: ©iStock/Bonchan

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South African Rhodes Food Group Holdings has recently purchased pie producer Ma Baker for R193m ($14.97m) and reported good growth in its domestic markets, although it did not fare as well in the international arena due to a stronger rand.

According to Rhodes Food chief executive, Bruce Henderson, the acquisition of the market-leading pie manufacturer in Kwa-Zulu Natal will strengthen the Group’s position in the growing pie and pastry market and create synergies with Rhodes Food’s pie, snacking and bakery businesses.

The Western Cape-based producer, which owns a portfolio of brands including Rhodes, Bull Brand, Magpie, Squish and Bisto, also procured spice, condiment and instant meals producer Pakco for R197m ($15.18m).

Henderson said the South African Competition Commission approved the acquisitions at the end of March.

Positive domestic growth versus tough international environment

The JSE-listed Group posted good results yesterday for the six months to end March, thanks to a 17.9% increase in regional sales – which includes South Africa and the rest of Africa – that offset a tougher international trading environment.

The company reported an increased turnover of 8.2% year-on-year to R2.2bn ($170m).

Operating profits rose 11.8% to R208m ($16.01m), compared to the year prior, while operating margin expanded by 30 basis points to 9.7%.

Neither of the two above purchases was included in the results.

Henderson noted the company’s fresh foods division grew sales by 27.8% with pies and snacking particularly clocking in excellent growth. Sales in sub-Saharan Africa, excluding South Africa, increased 55%.

Conversely, international sales declined by 20.7%, due to the strengthening of the rand, resulting in lower export volumes due to timing.

However, he said the company will focus on this segment in the next six months to reverse the slower volume growth experienced in the first half, despite a continuing volatile rand exchange rate that could risk performance.

Increased investment to further African footprint

Rhodes Food has spent more than R230m ($17.72m) in the past six months to upgrade its 15 production facilities based across South Africa and Swaziland.

A further investment of R220m ($16.96m) is planned for the second half of 2017.

Some of the money will be used to upgrade the production facilities at Ma Baker and Pakco.

Henderson said the company feels bullish about its prospects going forward and aims to maintain its strong growth momentum, grow brand share and further expand its sub-Saharan footprint.