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S.Africa's RCL Foods to lay off half of workforce

December 2, 2016
Consumer Packaged Goods

South Africa’s RCL Foods will lay off more than half of its workforce after cheaper poultry imports reduced its sales, the head of the firm’s Consumer Division said on Wednesday.

The poultry industry in South Africa has been battling for survival amid stiff competition from producers in Brazil, the European Union and the United States with industry experts predicting up to 4,000 job losses this year.

RCL Foods, which employs around 2,500 workers at its Hammersdale factory in the Kwazulu-Natal province, said it will reduce its production by 50 percent and slash 1,350 jobs. It was likely to cut even more jobs in the future, the firm said.

“We are in the process of retrenching 1,350 people right now,” RCL Foods Managing Director for the Consumer Division, Scott Pitman told Reuters.

“In three months time we must take stock again and if things haven’t improved we are going to lay off even more than that.”

RCL Foods, which produces poultry and other foods, said in August that its headline earnings per share, the main profit measure that strips out one-off items, fell more than 12 percent to 98.5 cents per share, forcing it to restructure its chicken business.

“We are making a big loss as are most of the other big poultry companies in the country at the moment,” said Pitman.

RCL shares closed 0.16 percent higher at 12.22 rand.

South African poultry producer Astral said in July it would cut back on production and consider job cuts as it came under pressure from high feed prices due to drought and from an over-supplied domestic market.

Domestic producers have long cried foul over cheap imports by overseas companies accused of dumping bone-in portions, popular locally but generally considered undesirable by consumers in the U.S. and Europe.

By Tanisha Heiberg

Source: Reuters

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