THE interim results announcement for Pioneer Food Group Limited show the margin and cash flow heavily impacted by input costs.
The results announcement for the six months period ending 31 March, was released last week.
The announcement follows in the wake of the revelation in May that Pioneer Food Group Limited was being investigated by the Competition Commission of South Africa.
There had already been a notice to shareholders, referring them to the disclosure mady by the Pioneer Foods in its pre-listing statement, dated 15 April, in regard to potential complaint referrals by the Competition Commission.
Pioneer Foods received a complaint referral on 6 May from the Competition Commission in connection with the alleged operation of a bread cartel within the Republic of South Africa and contravention of sections of the Competition Act.
Pioneer Foods and its advisors are studying the contents of the referral and will respond to the Competition Commission.
Commenting on the interim results, André Hanekom, Pioneer Foods’ Managing Director, said: “As expected our margin and cash flow has been impacted by very high input costs. We expect these pressures to continue in the second half of the financial year.
“We will continue to act responsibly in addressing margin pressure to achieve an optimal balance between the affordability of our products for the consumer and the sustainability of our operations.
“We remain positive that with the added capacity coming on-stream in the next 18 months, and the defensive nature of our product mix, we are well positioned to maintain our earnings growth momentum in the medium to long term, while recognising that margin pressure will cause growth to slow in the current financial year.
“In fact, the Group will do well to achieve growth in earnings for the year to 30 September 2008.”
Statistics show that Pioneer Foods’ revenue was up 25,0% to R7 billion.
Operating profit before items of a capital nature was up 11,7% to R395 million with operating profit margin 5,7% (2007: 6,3%).
Headline earnings were up 10,0% to R222 million, with headline earnings per share up 8,8% to 144 cents.
Net cash utilised by operations was R99 million (2007: R106 million generated).
The interim dividend per ordinary share was up 11,1% to 30 cents, with debt to equity ratio up to 53,0% (2007: 42,8%).
