Pioneer Food first-half earnings lower

Johannesburg – Pioneer Food Group on Monday reported a 0.6% decline in adjusted headline earnings per share to 218c for the six months ended March.

CEO Phil Roux said top line growth had been “fair” in most categories. “Margins compressed as pricing under-recovered input cost pressure - particularly in grains‚ broilers and eggs‚ given that volume preservation was a key consideration amidst constrained consumer spending.”

Roux was appointed CEO in April‚ post-period end.

A gross interim dividend of 46c per share was approved and declared by the board‚ up from 44c in the prior comparable period.

During the period‚ group revenue increased by 11% to R10.2bn‚ with growth in volumes contributing 6% and the average price inflation in the group’s product basket contributing the balance of 5%.

The cost of goods sold increased by 13% “largely as a consequence of rising raw material prices”‚ the group said.

Gross margins declined by 1.6% to 27.3%.

Other direct and indirect costs increased by 6% over the comparative period “due to effective cost management and improved production efficiencies‚ notwithstanding sustained increases in transport‚ energy and labour”.

The financial results were impacted by the international financial reporting standards share-based payment charges relating to the phase one and phase two broad-based black economic empowerment transactions.

Roux said cost management and efficiency improvements from value chain re-engineering initiatives contained cost-per-unit increases below inflation.

“Ceres Beverages and Bokomo Foods achieved pleasing results and improved profitability.

“A heightened focus on revenue growth management supported by brand revitalisation and innovation‚ together with resetting the cost base and the repositioning of the operating model in the short to medium term‚ will be key to enhancing the group’s profitability and overall competitiveness‚” he said.

Pioneer Foods said trading across the group’s product categories “is expected to be challenging for the rest of the year as consumer spend remains constrained”.

“The judicious management of price points and margins amid volatile input costs will be key. Resetting the cost base‚ an optimal operating model and efficiency focus are central to enhancing profitability and competitiveness.” 



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