RCL Foods of South Africa has commissioned a merchant bank to conduct a strategic review of products and holdings. The objective is to evaluate "whether the collective portfolio is optimally configured to achieve growth". RCL Foods operates the largest chicken production enterprise in the Republic of South Africa in addition is a manufacturer of animal feed, branded mayonnaise, peanut butter and bakery items. The company has suffered from the effects of COVID-19 and the deteriorating economy in South Africa. RCL Foods has yet to recover from the national outbreak of listeriosis resulting in extensive morbidity and mortality in 2017 through 2018. Currently the company faces a class action lawsuit that has the potential to severely impact the asset base.
The abridged integrated annual report for the year ended June 2020 showed revenue of $1.82 billion with a net loss of $62 million and a negative EPS of $6.70. The chicken segment represented 32.5 percent of company sales amounting to $576 million generating an EBITDA of $1.8 million with a negative 14.6 percent return on invested capital.
Rainbow Chicken Limited was established in 1960 and demonstrated rapid growth and profitability under the rigid leadership but highly efficient management of the founder, Stanley C. Methven, who died in an accident in Monaco in 1986. Thereafter the company was acquired and merged with a major feed milling group and suffered from mismanagement, competition and the deteriorating political environment and economy in South Africa.