Clover revenue up 10.7 per cent but hit-hard by local strike action - CNBC Africa

Clover revenue up 10.7 per cent but hit-hard by local strike action

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Revenue increased by 10.7 per cent to 7.997 million for the twelve months ended 30 June 2013 from 7.224 million rand in the previous comparative year.

Operating profit also increased by 5.4 per cent to 391.4 million rand from 371.2 million rand. The company’s operating margin however decreased slightly from 5.1 per cent to 4.9 per cent.

“Whilst the widespread industrial action in the mining sector undoubtedly slowed consumption of the group's products during the first part of the year, Clover also experienced seven days of industrial action at the start of its financial year with the national transport strike also indirectly impacting on the group's supply chain. All these labour-related events had an impact on sales volumes across all segments,” the group said in a statement.

[DATA CLR:Clover] is a producer and distributor of dairy and consumer products in South Africa.

Upward pressures on fuel and packaging costs, which were exacerbated by the weaker rand, also impacted sales.

Operating profit increased by 5.4 per cent to 391.4 million rand. Included in operating profit are capital profits of 24.1 million rand of which 7.3 million rand are profits and losses on the sale, scrapping and impairment of assets.

16.8 million rand also relates to a profit on the company having gained of control of the Clover Manhattan joint venture.

Clover concluded a transaction with Nestlé to establish a new beverage company called Clover Waters. Clover Waters will manufacture and distribute both Clover and Nestlé's range of water and iced tea products from August 2013.

External revenue for the company’s dairy fluids segment increased from 3 billion rand in the previous year to 3.4 billion rand.

 Its dairy concentrated products had a slight but not highly significant increase in external revenue as well.

Clover’s ingredients products segment decreased from 428 million rand in to 413 million rand, and its non-alcoholic beverages segment increase from 1.5 billion rand to 1.8 billion rand.

Overall, the dairy fluids segment volumes grew by 1.6 per cent, aided by the launch of Clover's new maas product earlier in 2013.

In 2012, the group acquired a 100% stake in The Real Juice Co Holdings Proprietary Limited for a cash consideration of 73.7 million rand, which was paid to AVI Limited.

The group’s motivation for the acquisition was to extend its footprint in the Western Cape, and grow its presence as one of the market-leading beverage businesses in the country.

Headline earnings per share increased by 3.4 per cent to 119.9 cents, and a gross cash dividend of 22.0 cents were declared.

“Consumer spending remains under pressure and coupled with continuous inflationary increases, it will be a challenge to balance short-term profits with long-term growth investments which are paramount to take Clover to the next level of growth,” the group said.

“Clover is focused on maintaining an optimal equilibrium to grow its existing business while exploring new possibilities and territories, even if this approach puts some pressure on short-term profits and cash flows.”