Johann Vorster, CEO of Clover. Picture: FINANCIAL MAIL
Johann Vorster, CEO of Clover. Picture: FINANCIAL MAIL

SHARES in Clover Industries dropped more than 10% to a three-week low on Friday after the branded consumer goods group said it expected half-year profit to end-December 2012 to fall due to higher operating costs.

Headline earnings per share in the review period are expected to be between 29% and 34% lower than the previous year’s 61.2c.

At 10.20am, Clover shares were down 10.52% at R16.33, valuing the company at R2.924bn.

The company said in a trading update on Friday that although revenue increased by 11% compared with the previous comparative period, the growth achieved was not sufficient to compensate for the additional costs — marketing, sales and other fixed costs incurred in relation to the launch of new products and platforms across the business.

These investments include some major market innovations that will serve Clover well into the future, including Prisma Pack for UHT milk and Tropika, Tetra top for Danao, as well as 30 days Ultra Pasteurised milk and 18 days Extended Shelf life fresh milk.

The results were further affected by isolated industrial actions, substantial fuel price increases and the undersupply of UHT milk to the market as a result of complications experienced during the conversion of existing UHT equipment for the new Prisma pack, and the importation of UHT milk to facilitate the Prisma conversion, it said.

Clover continued to achieve market share and volume growth in most of its key product categories. Project Cielo Blu remained on track and the company was implementing planned price increases to the trade, it said.

The company said the factors leading to the weaker earnings during this period did not negatively affect Clover’s strategic direction or value proposition.

The group expects to release its interim results on about March 12.