Pioneer Foods revenue up 10.5% for 11-month period
PIONEER Foods lifted revenue 10.5% to R16.7bn for the 11-months to August 31 even as sales volumes contracted in the constrained spending environment, the group said in a trading update on Tuesday.
Sales volumes contracted by between 2% and 4%, while product price inflation was 13.5% for the period. Electricity, payroll and transport costs in particular caused operating costs to rise, a statement said.
Grain prices were volatile and trending upwards. Maize prices were back at historical highs due to drought in the US.
Wheat, maize and bread product volumes at the group’s Sasko unit improved from June due to lower selling prices. Pasta volumes were stable at constant prices, in spite of stiff local and lower priced product competition.
"Consistent increases in raw material costs have necessitated price increases of 10% in wheat and maize products from September. Further price increases of between 8% and 12% will be implemented in October in bread, maize and wheat products," the group said.
In the AGRI division the broiler industry was experiencing "unprecendented price and volume pressure" and measures to contain operating cost increases could not protect margin at lower sales volumes.
At the Bokomo Foods unit, breakfast cereals performed well with good volume growth at constant selling prices. Volumes in Moir’s biscuits responded well to lower price points and were performing to expectation.
Better-than-anticipated international raisin prices and currency hedges had mitigated the impact on earnings of a smaller raisin crop.
Volumes were under pressure in ready-to-drink beverages due to tepid consumer spending, a colder-than-average winter season as well as cost increases of fruit concentrates. Sales prices of fruit juices increased by 12% from July.
Volumes in the fruit concentrate mixtures category grew by double digits as consumers supported these products as affordable alternatives to ready-to-drink products.
The annual results for the 12-months to September will be published on about November 26 this year.
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