According to the group’s financial year results ending 28 February 2014, seven per cent of the increment was attributed to food inflation while three per cent being a result of product mix changes.
The company registered a decline in profit before tax to 63 million rand in 2014 from 72 million rand in 2013.
[DATA SOV:Sovereign Food Investments Limited] noted that three factors influenced the performance of the company which are; decrease of imports into the country, the increase of input costs and the increase of administered prices by regulatory bodies such as electricity and municipal charges.
“Local prices of the group’s largest input cost, white maize, reached a 17-year high of 3,483 rand per ton in January 2014. This was as a result of the drought conditions experienced in some parts of the country,” said the company.
Headline earnings decreased by 21 per cent from 59 million rand in 2013 to 46 million rand in 2014 with headline earnings per share decreasing by 19 per cent from 74 cents in 2013 to 60 cents in 2014.
The company’s balance sheet remained strong with net asset value per share up 5.5 per cent from 8.08 rand in 2013 to 8.52 rand in 2014.
“Cash flow from operating activities reduced to 62 million rand in 2014, compared to the 92 million rand in 2013, due to the reduced profitability and increased working capital requirements,” said the company.
“Due to on-going increases in the cost of staple foods, energy and transport, the South African consumer is expected to remain under pressure thereby continuing to constrain consumer demand.”
Sovereign Foods is one of the major poultry producers in Africa ranked at the fourth place in the South African market.
BY TRUST MATSILELE