Advertise with fastmoving.co.za
 
 

The prior year's loss came after the company wrote off a loan to its then recently unbundled subsidiary, Dairy Farmers of SA.
The prior year's loss came after the company wrote off a loan to its then recently unbundled subsidiary, Dairy Farmers of SA.

Clover set to return to profit in year to June

RETAILER NEWS

By Karl Gernetzky and Nick Hedley - May 13th, 10:15

Clover, which makes dairy-based foods and beverages, says it will return to profit in the year ending June 2019 after making its first annual loss in more than a decade in the prior year. 

The group’s share price fell 0.92% to R22.65 on Friday, a one-month low, despite the possibility of delisting from the JSE before it releases its results.

Its shareholders have accepted a buyout offer of R25 per share from a consortium led by Tel Aviv-based Central Bottling Company, but the withdrawal by consortium member Brimstone Investments has delayed proceedings.

Clover said it is expected to report headline earnings per share of 203.6c for the year to end-June after recording a headline loss per share of 23.1c in the prior comparative period.

The prior year’s loss came after the company wrote off a loan to its then recently unbundled subsidiary, Dairy Farmers of SA. That unbundling forms part of Clover’s bid to branch out into higher-margin consumer goods, such as olive oil and beverages.

Clover’s update showed a mixed performance, and the pressure on retailers has clearly not bypassed the company, said Small Talk Daily research analyst Anthony Clark.

The underlying trends in the dairy sector remain positive, and despite Clover being unable to pass on price increases to consumers, it may be able to do this later in the year, he said.

“However, it is all academic, as the R25 buyout for Clover has been approved, which indicates that the shareholders at the current level of earnings and the take-out place have gained a fair price from the consortium seeking to buy out Clover,” Clark said.

Clover said that trading conditions in the retail and fast-moving consumer goods sectors had worsened in the months leading up to SA’s elections.

“Despite this, Clover continued to increase its market share in various categories on the back of marketing investment and additional trade support. This will bode well for future performance,” it said.

Clover said income from services “has come under pressure” due to lower volumes at one of its principals and the loss of a distribution contract. While a new principal has signed up, “efficiencies and the full financial impact of the contract” will only be realized in the next financial year."

The group has also signed a new five-year agreement with Danone Southern Africa to provide warehousing and distribution services from July. The deal is worth more than R400m, Clover said.



Business Live  

Read more about: share price | profit | fmcg | dairy sector | clover

Related News

Spar lifts dividend after 'strong' interim performance
15/05/2019 - 08:53
Spar Group has hiked its half-year payout to shareholders by 5.2% on the back of “a strong performance” in the six months to end-March.

Brimstone confirms exit from Clover deal
12/04/2019 - 10:01
Brimstone Investments confirmed that it will not be participating in a consortium seeking to acquire SA’s biggest dairy producer Clover, but had agreed on a plan to facilitate its exit.

Morrisons books 3rd straight year of profit & sales growth
13/03/2019 - 13:36
Morrisons has recorded another year of growth in sales and profit as chief executive David Potts boasted that the Big 4 grocer’s turnaround scheme was “well on track”.

AVI hit by constrained consumer spending
13/03/2019 - 12:42
Food and beverage company AVI Limited felt the pinch of constrained consumer spending as income from its shoe brands Green Cross and Spitz slid in the half year to December, resulting in revenue in the footwear and apparel category declining by 9.2 percent to R1.14billion.

Sugar tax didn't sweeten the deal for Clover
05/03/2019 - 11:02
The sugar tax may be aimed at reducing consumption, but it ate its way into Clover's profits, the group said on Tuesday.