RCL Foods, the branded foods, poultry and sugar group, has agreed to sell Vector Logistics to AP Moller Capital, in an R1.25 billion deal as it streamlines its portfolio.
RCL Foods said yesterday that the disposal of Vector Logistics was a further step in the broader reshaping of RCL Foods’ underlying portfolio of businesses.
In 2020 RCL Foods initiated a strategic review of the operations and resolved to separate its value-added branded businesses from its poultry and logistics operations to better position them for optimal growth as independent entities.
“In addition, RCL Foods revised its strategic focus towards unlocking growth in the value-added consumer brands component of its business through sharper strategic focus and active investment,” it said.
Vector Logistics is a frozen logistics operator, providing RCL Foods and numerous third parties with multi-temperature warehousing and distribution, supply chain intelligence, and sales and merchandising solutions.
RCL Foods CEO Paul Cruickshank said: “We believe this is an important and positive step forward for Vector Logistics, which has grown significantly in the 18 years it has been part of RCL Foods.
“We believe that AP Moller Capital is the ideal custodian to support Vector Logistics’ success because of its extensive operational and investment track record in Africa and the infrastructure sector and the strong alignment between the parties’ respective ways of working business values, and transformational focus,“ he said.
RCL Foods said the purchase by AP Moller Capital provided Vector Logistics with an opportunity to accelerate its mission of “Going Beyond” in supply chain expertise and logistics services, including expanding further afield to meet growing demand in Africa.
Earlier this month RCL Foods did not declare a dividend in the six months to December 31 and did not foresee a lifting of the tight consumer environment in the short term.
Earnings before interest, taxes, depreciation, amortisation and impairments fell 8.9% to R1.18bn due to difficult trading conditions marked by high input costs, rising living costs for consumers and significant load shedding. High additional investment on energy was anticipated.
AP Moller Capital is a fund manager that was founded in 2017 and regulated by the Danish Financial Supervision Authority, is an affiliate of AP Moller Holding and was established to manage stand-alone alternative investment funds focusing on infrastructure in growth markets.
AP Moller Capital partner Joe Nielsen said: “Vector Logistics is highly respected with a long track record in South Africa, and we are excited to contribute to its transformative vision for the industry and the region.
“Vector Logistics’ reliable operations enable maintenance of the cold chain for food products, which increases shelf life and reduces food waste. We see a growth opportunity for Vector Logistics and we believe that our experience and our network will help to drive this growth.”
Vector Logistics managing director Chris Creed said having the backing of AP Moller Capital provided significant potential for greater impact.
“Given our vision of transforming the logistics industry, AP Moller Capital would be able to help us move up the supply chain maturity curve, particularly from a technological perspective, to support growth, and to support a strong Environmental, Social, and Governance (ESG) agenda to ensure a sustainable future for our business and its people,” he said.
AP Moller Capital said it was committed to maintaining business as usual and minimising any disruption to management, staff, customer, and supplier relationships. Vector Logistics will continue to service its current customers based on its existing contractual agreements.
The share price was up 1.26% at R12.10 in later afternoon trade yesterday.
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