Chicken Industry

RCL will let Rainbow fly free

Rainbow Chickens, South Africa’s second largest poultry producer, is on the way to being separated from its parent company, RCL Foods.

Rainbow used to be RCL’s chicken division, and it had to be restructured after suffering substantial losses due to the impact of dumped chicken imports.

It has been revived by Marthinus Stander, MD of Rainbow, under a more decentralised structure. A complete separation is on the cards, according to RCL chief executive Paul Cruickshank.

In an interview after this month’s results presentation, he said Rainbow was operating as a largely autonomous subsidiary, and the group was exploring ways to fully separate the chicken business from the RCL group.

He said RCL wanted to separate Rainbow as most of its international competitors were standalone chicken companies, and because they wished to reduce the volatility in earnings that Rainbow brought to the group.

Rainbow’s return to profitability under Stander’s turnaround plan showed in the year-end results. Rainbow’s revenue increased 10 percent to R11.38bn, almost a third of group revenue, and its underlying Ebitda (earnings before interest, tax, depreciation and amortisation) grew 214% to R348.6 million, off a low base of R111m in the prior period.