Business

Rainbow estimates listeriosis will cost it R75 million – plus R20 million a month in profits

Business Insider SA
  • The listeriosis outbreak will cost it an estimated R75 million, Rainbow Chicken's parent company RCL told shareholders on Monday.
  • That does not include an estimated R20 million a month in lost profits from polony and other products not selling.
  • The bigger Tiger Brands estimated its Listeria costs at a minimum of R337 million, and up to R50 million a month if none of its cold meats sell.

Its best estimate of the direct and identifiable cost of the listeriosis outbreak is R75 million, Rainbow Chicken's parent company RCL told shareholders on Monday afternoon.

That includes the costs of recalling its chicken polony, destroying recalled products, testing costs, and advertising and in-store communication.

But it does not include the "financial impact associated with lost contribution on polony products being out of trade", the company said. Nor does it include the impact on its other chilled meat products.

Those are hard to estimate, RCL said, but could be around R20 million in profit lost a month, every month, until things return to normal.

See also: Another Tiger Brands factory just closed after positive Listeria tests. This is now the definitive list of banned meat products.

"Management is actively engaging government in order to resume operations at the Wolwehoek processing plant as soon as possible," it said.

Tiger Brands, which the government identified as the primary source of the deadly strain of listeria, previously said it expects listeriosis to directly cost it a minimum of R337 million.

That is not counting R50 million per month it could lose in earnings if it had to stop cold meat production entirely – nor up to  R425 million affected consumers could claim from it in a class-action lawsuit.

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