Advertise with fastmoving.co.za
 
 

The group restored market share in some key categories, but in some cases paid for it with margin squeeze.
The group restored market share in some key categories, but in some cases paid for it with margin squeeze.

Pioneer Foods puts drought behind it

RETAILER NEWS

By Andries Mahlangu - May 21st 2018, 09:42

Pioneer Foods enjoyed an improved performance in the six months to March, helped in part by a low base created in the year-earlier period when it was still dealing with the effects of the drought.
 

Headline earnings per share (HEPS) rose 30% to R3.17, Pioneer said on Monday, as earnings from essential foods as well as international businesses recovered from last year’s slump.

Operating profit in the essential foods division leapt 70% to R561m, even though revenue in the segment dropped 10% to R5.82bn.

A strong performance from maize, as well as higher profits from pasta and rice, supported essential foods. The White Star maize brand, in particular, benefited from lower raw material costs.

The 2017 results were adversely affected by an unfavourable maize procurement position taken in 2016 to ensure supply throughout the drought. Pioneer said in its 2017 interim results statement that the "margin drag on maize" would cease from June 2017.

A record maize crop in 2017 ensured prices fell, leading to lower input costs for food producers.

Last Monday’s results showed operating profit in the grocery segment dropped 3% to R292m, despite revenue growing 9% to R2.6bn.

In groceries, the group said it "restored market share in key categories", though in some cases the price for this was lower profits and smaller margins. "Operating costs overall were tightly managed," it said.

Operating profit in the international division rose 75% to R121m, off revenue of R1.4bn, which was up 10% on 2017.

Group total sales volumes grew 4%, outstripping revenue, which fell 3% to R9.9bn, due to price deflation in some commodities, notably maize, wheat and rice.

Group net profit rose to R622.2m, from R459.6m a year ago.

The company kept its interim dividend steady at R1.05 per share.

BusinessDay 

Related News

H&M’s sales growth fails to ease investors concerns about margin pressure
18/06/2019 - 15:41
Fashion retailer H&M reported sales grew for a fourth straight quarter, but also hinted it had needed to invest more to boost its online business, disappointing investors already concerned about margin pressure.

Fashion house Chanel parades its independence as profits rise
18/06/2019 - 12:49
Luxury fashion group Chanel, whose star designer Karl Lagerfeld died in February, reported higher annual sales and profits and once again reaffirmed its independence, stating it was not for sale.

Zara owner Inditex shakes off chill with strong second quarter start
14/06/2019 - 11:22
Zara owner Inditex bounced back from a weak start to 2019, when unseasonably cold weather in southern Europe stifled sales for the Spanish fashion group, with a strong performance in the first weeks of the second quarter.

Mr Price Group's shares rally on annual results
31/05/2019 - 10:16
Mr Price Group’s shares opened sharply higher after the company raised its annual dividend thanks to better earnings.

Pepkor says market-share gains boosted half-year earnings
29/05/2019 - 09:34
Pepkor, which owns the Pep and Ackermans brands, says sales and earnings rose in the six months to end-March thanks partly to market-share gains in clothing and merchandise.