Sharenet Sites 
Sharenet Sites
PFG - Pioneer Food Group Limited - Further trading update and earnings guidance, inclusive of the impact of the BEE transaction Pioneer Food Group Limited Incorporated in the Republic of South Africa Registration number: 1996/017676/06 Share code: PFG ISIN code: ZAE000118279 ("Pioneer Foods" or "the Group" or "the Company") Further trading update and earnings guidance, inclusive of the impact of the BEE transaction Pioneer Foods provides this trading update and earnings guidance based on the results for the five months to 29 February 2012, ahead of the Group`s closed period from 16 March 2012 to the publication of the interim results for the six months to 31 March 2012 on or about the 21st of May 2012. Trading update Revenue for the five months increased by 13% to R7.5 billion with volumes contracting by between 4% and 6% on average in the Group`s product basket as consumer spend remains constrained. Price inflation on the Group`s basket of products is estimated at about 18% for the period under review. Substantial increases in operating costs continued, most notably in electricity, payroll and transport costs. Although maize prices retreated from historical highs in the short term, overall grain raw material prices are still significantly higher than in the comparative period. Margin maintenance is driven by actively managing selling prices and diligent cost control measures. Sasko`s sales volume performance for wheaten flour and bread is impacted by the increased volume base in the comparative period resulting from the gross profit reduction in that period. As a result wheaten flour and bread sales volumes were down and some market share was shed in the standard bread market. The share of the expanding premium bread market has grown, though off a low base. National maize meal consumption in general has been weaker, though it is still at a relatively high base. The Group continued to price its maize meal products as required with market leadership maintained within a stable market share environment. Rice and pasta volumes increased despite the increased presence of cheaper imported products in both categories. Rice prices increased whereas pasta prices remained constant. The Agri business remained under pressure in the broiler and egg markets. The industry is grappling with cheaper imports, systemic oversupply and historically high maize prices. Selling prices remained under pressure. In Bokomo Foods, breakfast cereals performed well with an expanded range of value-added products in Weet-Bix, Nature`s Source and Otees. The launch of Moir`s biscuits has been well received and the production roll-out is progressing to expectation. The outlook for raisins is improving and volumes should be better in the current financial year. At The Ceres Beverage Company, ready-to-drink beverage volumes came under increasing pressure towards the end of the period under review. A significant cost increase in fruit concentrates in particular as well as higher fuel costs impacted margins. Pepsi is continuing to grow volumes close to double-digits. Volumes in the fruit concentrate mixtures category continued to grow by double digits as consumers supported these products as more affordable alternatives to ready-to- drink products. Fruit concentrate mixtures remains a very competitive category. The Wadeville fruit juice factory is being commissioned and is expected to be fully operational by the end of the financial year. Service levels are anticipated to improve and distribution cost savings will be realised by producing closer to the market. Completion of BEE transaction The final outstanding conditions precedent for implementing the 13,5% BEE transaction are close to fulfilment and Pioneer Foods anticipates that the 28,7 million additional ordinary shares resulting from the transaction will be issued and listed on the JSE soon. Pioneer Foods will receive net cash of R546 million after the initial contribution for the subscription price from the BEE shareholders and the financiers of the transaction. For the first seven years these newly listed shares will be treated as treasury shares in terms of IFRS accounting principles with a minimal impact on earnings or earnings per share. The exception is the recognition of the once off non cash flow share-based payment charge in terms of IFRS ("IFRS charge"). The impact on earnings in the reporting period is estimated at R154 million. Shareholders are referred to the circular (dated 19 January 2012) for the detail of the transaction. Impact on earnings Consequently earnings and headline earnings per share, including the IFRS charge of R154 million, is expected to decrease by between 45% and 55% compared to the corresponding period of the previous year. Adjusted earnings and headline earnings per share, excluding the IFRS charge is expected to decline by between 9% and 19% compared to the corresponding period of the previous year. The information provided has not been reviewed or reported on by the Group`s independent external auditors. Paarl 16 March 2012 Sponsor PSG Capital Date: 16/03/2012 07:05:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
