South Africa’s RCL Foods has successfully moved forward with the unbundling of its Rainbow Chicken business, which is now listed separately on the Johannesburg Stock Exchange (JSE). The company, known for its Selati sugar, Sunbake bread, and Yum Yum peanut butter brands, is restructuring its portfolio to enhance profitability.
The spin-off of the Rainbow Chicken business involves distributing newly-listed shares to RCL shareholders on a one-to-one basis, with trading set to commence on July 1. This strategic move was initiated in 2021 when Paul Cruickshank took on the role of CEO and implemented a new strategy focusing on grocery, pet food, and baked goods segments.
While RCL Foods, a branded and private-label manufacturer serving retail and foodservice channels, sold its Vector logistics business segment last year, it chose to retain its sugar operations following a planned exit in 2022. Operating under the Rainbow brand name, the company supplies fresh and frozen chicken, as well as value-added products, to retail and out-of-home channels.
Presenting its first-half results up to the end of December, RCL Foods mentioned the impact of Avian influenza but highlighted Rainbow’s improved performance due to operational enhancements, increased margins, and higher volumes. The board believes that unbundling Rainbow will allow both businesses to pursue growth initiatives more effectively.
In a recent trading update for the financial year ending in June, RCL Foods anticipates a significant increase in headline earnings per share, driven primarily by Rainbow and its groceries business. The company is optimistic about the future prospects of both entities and their ability to focus on growth opportunities and capital allocation priorities.
