Pioneer Foods results buoyed despite combative environment

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Pioneer Foods results buoyed despite combative environment

“Revenue from continuing operations for the period under review increased by 9 per cent to 8.8 billion rand, largely as a consequence of increased selling prices, exports and sales mix. Volumes across the Group’s basket increased by 0.4 per cent,” Pioneer Foods said in a statement.

“Revenue, inclusive of Quantum Foods, increased by 7 per cent to 10.6 billion rand.”

Revenue for the six months ended 31 March 2014 was up seven per cent to 10.5 million rand.

Operating profit from continuing operations increased by 43 per cent to 855 million rand, delivering an operating profit margin of 9.7 per cent, in contrast to a 7.4 per cent profit margin in 2013.

Pioneer Foods is a food and beverage company based in South Africa whose brands include Ceres fruit juice, the Bokomo brand and Heinz Foods SA.

Profit before tax however significantly increased to 883 million rand for the period under review from 490.5 million rand in 2013. Gross profit followed the same trend, increasing to 2.6 billion rand from 2.3 billion rand in 2013.

(READ MORE: Pioneer Foods’ results affected by lower consumer spending)

Headline earnings per share were up 109 per cent to 380 cents, and the company’s interim gross dividend per share also increased 41 per cent to 65 cents.

“While cost of goods sold from continuing operations increased by 7 per cent, positive leverage was generated with the gross profit margin expanding to 30.3 per cent from 29.3 per cent, consequent to procurement and efficiency gains,” Pioneer Foods explained.

“Cash operating expenses, excluding the adjustments referenced below, increased marginally by 2 per cent as a result of value enhancement initiatives gaining traction.

The company’s Essential Foods division showed marginal improvement, following maize profitability improving to normalised levels, with wheat and rice also posting improved performance.

Its Ceres beverages business reported particularly strong results, but competition within the dairy fruit blend category remains fierce, putting pressure on margins.

In late 2013, Pioneer Foods announced plans to unbundle Quantum Foods and to list the business as a separate legal entity on the Johannesburg Stock Exchange during 2014. The listing is likely to be early in the new financial year.

(READ MORE: Pioneer Foods to see HEPS growth amidst Quantum unbulding)

“A critical focus on market share is fundamental as a key source of growth in a highly combative market environment,” Pioneer Foods explained.

“Continuing transformation of the organisation’s business model is an enabling imperative to sustained profitability and margin expansion.”