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Voluntary trading update for the four months to 31 January 2013
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 Company”)
Voluntary trading update for the four months to 31 January 2013
As is customary Pioneer Foods provides this voluntary update on the Group`s
trading for the four months to 31 January 2013.
Revenue for the four months increased by 12% to R9.82 billion with volumes
increasing by between 3% and 5% on average in the Group`s product basket.
Price inflation is estimated at between 7% and 9% for the four months under review.
Continuing cost management and efficiency drives supported by active price point
management stimulated volume growth across the Group’s product basket as
margins came under pressure in the generally weak trading environment.
During the four months under review total cost increases were contained at 6% and
as low as 2% if energy and distribution costs are excluded, providing zero cost
inflation on a per unit basis.
Further increases in wheat prices are expected while maize prices are expected to
moderate in months to come. Pricing pressure for rice is expected to remain.
The impact of upward trending costs is compounded by the weakening Rand,
making further price increases likely across the Group’s product basket. The lag in
recovery of rising input costs and the weak trading environment in general are likely
to place pressure on earnings growth.
Sasko
In total Sasko’s performance is below the previous year due to a lag in raw material
cost recovery. The competitive price position supported total volume growth across
the Sasko product basket. Underlying maize and wheat inflation amounted to some
16% with final product selling inflation for these products around 10%.
White Star super maize meal responded positively with this competitive price
position and achieved volume growth irrespective of the decline in consumption at
industry level.
Bread volumes remained flat although performance of the total wheat value chain
improved year on year.
The performance of the rice category was negatively affected by competitive price
offerings from Indian origin compared to inflationary cost pressures on imports from
Thai origin. The devaluation of the Rand further contributed to increased raw
material costs. Overall volumes sold for the four months under review are ahead of
the previous year.
Agri
Egg volumes increased due to better production efficiencies. Egg prices did not
respond to raw material price increases and led to margin pressure.
Broiler prices increased up to December leading to lower sales volumes amidst a
glut of imported product. Sales prices adjusted dramatically lower from January to
address high inventory levels. Current pricing levels are below cost.
Feeds maintained margins and enjoyed volume growth.
Bokomo Foods
Overall volumes are up 6% and price inflation averaged around 9% with raw material
costs increasing by some 14%. The cost per unit remained flat. Margins responded
positively to price point adjustments.
Weet-Bix maintained its market leading position after posting a 10% price increase
from November.
Cereals volumes are up 3%. Cost inflation amounted to 4% with raw material prices
increasing by 11%. Margins remained stable benefitting from efficient cost
management.
Dried fruit volumes are up by more than 50% with better availability of vine fruit in
particular. Raw material prices increased by 6%, excluding fruit which are procured
later in the year.
Biscuit volumes are up by 18% from a relatively low base benefiting from aggressive
price discounting at comparable quality levels.
Cornflakes volumes are up by double digits with the new plant ramping up
production and exports to Africa growing accordingly.
Ceres Beverages
Long life juice volumes were down as local market volumes contracted with cost
inflation of 18% driven mainly by the higher price for base concentrates. International
volumes grew by double digits with excellent profitability supported by the weaker
Rand.
Operational efficiencies improved, supported by the coming on-stream of the
Wadeville plant.
Carbonated soft drink volumes expanded by single digits mainly from the double digit
increase in dealer-owned-brands against price deflation. Pepsi’s volumes remained
stable. Lipton continued to grow volumes by double digits.
Volumes of fruit concentrate mixtures contracted by double digits in the weak
consumer environment.
The Group will provide further earnings guidance prior to release of the 6 month
results expected on or about 20 May 2013.
The information provided has not been reviewed or reported on by the Group`s
independent auditors.
Paarl
15 February 2013
Sponsor
PSG Capital
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