PIONEER FOODS are looking forward to 2008 after passing the R10 billion mark in revenue for 2007.
The Paarl based company is considering a listing on the JSE after their positive financial results.
However, the allegations of collusion on the bread price, as well as the sub-prime bond crisis, may delay these plans.
The company experienced a range of ‘first evers’ in 2007, which they consider a benchmark year for Pioneer Foods. Steady gains in revenue were successfully achieved despite the ever increasing commodity prices of grain and food price inflation.
Net cash profit was over R1 billion and headline earnings were over R500 million for the first time.
“On the production side, high inflation, expensive commodities such as grain, ever increasing food prices and power cuts did not affect our overall production.
“We took pro-active steps years ago when the threat of power cuts were on the horizon. To eliminate these risks, we decided to install power generators throughout our country-wide production plants,” says André Hanekom, Managing Director of Pioneer Foods.
“The challenge for Pioneer Foods was to strike the right balance between affordability of our products and the sustainability of our business.”
After almost 25 years of real decline in food prices Pioneer Foods are experiencing a significant increase during times of record crops.
André Hanekom says: “For as long as most people can remember, food has been getting cheaper and farming has been in decline.
“Between 1974 and 2005, food prices on world markets fell by three-quarters in real terms. Yet what is most remarkable, is that record prices are being achieved at a time not of scarcity, but of abundance.”
According to the International Grains Council, this year’s total cereals crop will be the largest on record, 89 million tonnes more than last year’s harvest, another bum-per crop. The global increase in demand for grains, changes in eating patterns and the growth of bio-fuels, led to the world stock-to-usage ratio currently being very close to an all time low.
With extremely low levels of stocks available in the world, any signs of unstable wea-ther could lead to further significant increa-ses in grain prices and, inevitably, food prices.
“Consequently we expect to see high food prices for a number of years to come and that grain prices will continue to be very volatile.”
Pioneer Foods is the third largest food ma-nufacturer in South Africa.
With its roots in maize and wheat milling and its sights set on becoming the best food company in Africa, Pioneer Foods is simultaneously the undisputed leader in the staple food sector, with Sasko bread, Weet-bix and other household products. Staple food accounts for 70% of the group’s revenue.
Pioneer Foods is one of the fastest growing brand merchants, exhibiting an expanding range of household names.
