We don’t often concern ourselves with the affairs of holding companies, because, like wizards, “they are subtle, and quick to anger.” But Remgro owns a fair-sized chunk of this great industry we call home, so it’s worth a look in every now and then. Right now, it seems, it’s exercising its subtle intelligence on the issue of RCL FOODS, in which it owns an 80.4% stake. And it looks like they may be sticking there for a bit, rather than relieving the lesser shareholders of any of their stock. While RCL had a great set of results, with headline earnings up +26% to R519m, the business gets 20% of its wheat from Russia and 5% from Ukraine, so input costs are likely to come under significant pressure in the months ahead. And the rising fuel price (see Trade Environment, below) doesn’t help either, logistically speaking. Remgro might want to consider orchestrating a merger between RCL and spreads business Siqalo Foods, further diversifying RCL’s portfolio of grocery brands and achieving further efficiencies among its holdings.
Comment: With holdings in RCL, Distell, BAT and Grindrod Logistics, Remgro cuts a wide swathe across our sector, and its movements require close scrutiny.