RCL Foods, the South African food producer backed by Johann Rupert, expects headline earnings per share to fall by as much as 35 percent for the year ended June 2026 as weakness in its sugar business, disruptions at its pet food operations, and impairments weigh on results.

Headline earnings per share from operations are expected to come in at between R1.01 ($0.05) and R1.09 ($0.06), compared with R1.56 ($0.09) a year earlier, according to a trading statement released Monday. Earnings per share are expected to decline by between 50 percent and 55 percent to between R0.81 ($0.05) and R0.90 ($0.05) from R1.80 ($0.11) in the prior year.

The sharper decline in earnings per share reflects a R0.20 ($0.01) per-share impact from an impairment of goodwill and brands in RCL Foods’ Sunshine unit. The write-down followed weaker profitability after the business struggled to rebuild volumes following a labor disruption at its Durban factory in December 2024.

The comparison with the previous year also includes several items that boosted earnings at the time. RCL Foods recorded a R0.21 ($0.01) per-share gain from the disposal of discontinued operations and received R0.03 ($0.0018) per share in insurance proceeds.

Sugar sales decline as imports rise

On an underlying basis, which excludes material one-off items and certain accounting adjustments, headline earnings per share are expected to decline by between 25 percent and 30 percent. RCL Foods said underlying earnings were hurt mainly by weaker profitability in its Sugar business, associate Royal Eswatini Sugar and Pet Food operations.

Sugar was one of the biggest drags on the result. The business faced increased competition from deep-sea imports at a time when effective tariff protection was not in place. As a result, total local market sales across the industry fell 10.3 percent, while low-priced export volumes jumped 48.3 percent.

Falling international raw sugar prices added to the pressure. Prices declined 22.6 percent, while a stronger rand further reduced the value of export earnings. Average export prices were about R7,000 ($433) a ton, or 51.9 percent below domestic prices.

At the same time, the industry was unable to raise local prices enough to offset higher inflation-related costs. The tariff issue is still before the International Trade Administration Commission, leaving the sugar business facing continued pressure on margins.

Efficiency measures support performance

RCL Foods’ Pet Food business also had a difficult year. Sales volumes fell 20.5 percent after food-safety-related production disruptions restricted supply during the second half of the year. The interruptions also resulted in higher stock write-offs.

Not every part of the group performed poorly. The Culinary and Baking businesses delivered solid results despite lower volumes across their respective categories. RCL Foods said the businesses benefited from its Continuous Improvement and Net Revenue Management initiatives.

The latest trading update gives investors a clearer picture of the pressures facing the food producer ahead of its full-year results. RCL Foods is scheduled to publish its audited financial results on Aug. 31, 2026.