Pioneer Foods: Rising input costs hit profit

Paarl / ZA. (pfg) Pioneer Foods disappointed shareholders this week when it reported that steeply rising fuel and raw materials costs took a big bite out of the group´s profit margin for the financial year. South Africa´s third largest food manufacturer operates through Sasko, Bokomo Foods, Ceres and its Agri business. A detailed presentation is available here. Key features:

• Revenue up 27 percent to 14,9 billion ZAR;
• Operating profit before items of a capital nature up four percent to 865 million ZAR;
• HEPS declined by eleven percent to 2,92 ZAR per share;
• Final dividend maintained at 0,66 ZAR per share;
• Total dividend up eleven percent to 187 million ZAR (0,96 ZAR per share);
• Debt to equity ratio 34 percent;
• The Group listed «by introduction» on 22 April 2008;
• Rights issue for 500 million ZAR successfully completed in June 2008;
• Group debt facilities restructured, limiting exposure to the unstable economic markets.

Managing director Andre Hanekom said: «We managed to achieve good volume growth in key product categories and increased final product prices, but failed to fully recover steeply rising input costs as indicated by our declining profit margin». «Exceptionally high cost» of raw materials, fuel, energy and generally depressed economic conditions caused «challenging» trading conditions. Those rising costs squeezed the group´s operating profit margin from 7,1 percent to 5,8 percent.
Info: Annual results presentation december 2008 (PDF | 42 pages).