RCL – product recall and suspension of operations
On 5 March 2018 the Company announced on the Stock Exchange News Service that Rainbow polony products from the Wolwehoek processing plant were being recalled and that the plant had been temporarily closed, as precautionary measures due to the current listeriosis outbreak. The purpose of this announcement is to update shareholders with regard to the financial impact of the product recall and the suspension of operations at the Wolwehoek processing plant.
Estimates provided are on a pre-tax basis. They are management estimates only, and have not been reviewed or reported on by the Company’s auditors. Potential insurance recoveries in respect of these costs are not expected to be significant. Identifiable costs incurred to date, associated directly with the recall and suspension of production, are estimated to be approximately R75m.
This estimate includes:
– Recalls and returns from customers
– Value of stock on hand of finished goods, raw materials and work-in- progress
– Logistics (distribution and handling) costs
– Destruction and dumping costs
– Testing costs
– Media and in-store communications costs
In addition, there is a financial impact associated with lost contribution on polony products being out of trade, as well as the unexpected impact on the balance of Rainbow’s chilled processed meats and other chicken categories. This indirect impact is difficult to determine or quantify at this stage, but management estimates the profit impact to be approximately R20m per month. Management is actively engaging Government in order to resume operations at the Wolwehoek processing plant as soon as possible. Food safety has always been of paramount importance to RCL FOODS, and we continue to apply our strict food safety protocol by having rigorous food safety procedures in place, including regular product and environmental testing, at all of our food production facilities. We will continue to take every precaution to safeguard our products, customers and consumers and to drive and support national efforts with Government to resolve the current listeriosis challenge.
Shareholders are also referred to:
1. The RCL FOODS fact sheet available on the Company’s website at www.rclfoods.com, which is aimed at assisting all stakeholders in understanding the facts at our disposal around listeriosis;
2. An independent website hosted by Dr Lucia Anelich at www.listeriosisfacts.co.za