PIONEER FOOD GROUP LIMITED - Trading Statement And Update For The Six Months Ended 31 March 2018

Release Date: 19/04/2018 07:05
Code(s): PFG
Wrap Text
Trading Statement And Update For The Six Months Ended 31 March 2018

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" or the “Group")


Trading statement

The following disclosure is made in accordance with Section 3.4 (b) of the Listings Requirements of the JSE
Limited. Pioneer Foods advises that for the six months ended 31 March 2018, a reasonable degree of certainty
exists that operating profit and earnings will be as follows:

                              31 March 2017         31 March 2018 expected              31 March 2018
                                  actual                    range                     expected % change

 Operating profit
 before items of a              R688 million       R922 million - R991 million         34% - 44% higher
 capital nature

 Adjusted operating
 profit before items of a
                                R700 million       R917 million - R980 million         31% - 40% higher
 capital nature (note 1
 and 2)

 Headline earnings per
                                244.4 cents         305.5 cents - 329.9 cents          25% - 35% higher

 Adjusted headline
 earnings per share             253.4 cents         309.1 cents - 334.5 cents          22% - 32% higher
 (note 1)

 Earnings per share             247.6 cents         321.9 cents - 346.6 cents          30% - 40% higher

1. Adjusted for the IFRS 2 share-based payment charge relating to the Phase 1 (2006) B-BBEE transaction and
    the effect of the related hedge, amounting on a net basis to a loss of R5.2 million after tax (31 Mar 2017:
    R7.4 million loss after tax). An adjustment was also made in March 2017 for specific once-off merger and
    acquisition costs (R9.3 million).
2. The major reason for the difference between the growth rate of operating profit versus headline earnings
    is the Heinz Foods SA related, mostly once-off adjustments, which are alluded to in the trading update

Trading update

The Group delivered a credible performance for the six months ended 31 March 2018, with both volume and
margin growth over the comparative period, which included the negative outcome of the purchase position on
maize and the poor performance of fruit exports.
Total volumes are 4.3% higher while Group turnover decreased by 2.8% from R10.2 billion to R9.9 billion,
largely due to sales price deflation in soft commodities. Maize price realisation contracted materially as
anticipated with wheaten products and rice also seeing deflation, albeit to a lesser extent. The judicious
softening of price points supported volume and market share growth.

Essential Foods

Improved sales volumes and the normalisation of the raw material procurement position resulted in a sound
recovery in maize profitability with White Star restoring its market share in a growing category. This
improvement was partially offset by a regression in the wheaten value chain performance with flour and bread
seeing margin compression in the face of weaker demand and a more competitive environment. Rice
continues to make a stronger portfolio contribution.


Cereals, long-life fruit juice, accompaniments and baking aids performed well from a volume and operating
profit point of view. The snacking category recorded negative volume growth and a decline in profitability.
Liqui-Fruit gained share while Weet-Bix and Safari maintained its share.


Long-life fruit juice and dried fruit export volumes and margins recovered in line with expectation and posted
an improvement on 2017 profitability. Margin recovery is however, as previously indicated, not comparable to
that achieved during 2016. The major reasons for the lower margins as compared to 2016 are the
strengthening of the rand from the date of procurement of raw materials until manufactured products are
sold; and the continued constrained trading environment in Southern Africa.

The Lizi’s acquisition has been successfully integrated with the UK business and is already making a positive
profit contribution. The rest of the UK business has shown strong volume growth, while margins are
continuously improving as the business adjusts to Brexit-related structural changes. The Nigeria business
performed to expectation.

Joint Ventures

The performance of joint ventures as a whole was materially impacted by the once-off impairment of certain
items on the Heinz Foods SA balance sheet together with a poor operating performance by this entity.
Regulatory approval of the Heinz Foods SA acquisition is in progress. The contribution from joint ventures,
excluding Heinz Foods SA, showed a year on year improvement.

Pioneer Foods is due to release its interim results for the period ended 31 March 2018 on or about 21 May

The financial information contained in this trading update, has not been reviewed or reported on by the
Group’s external auditors.

* All market share figures are from the Nielsen’s Trade Desk for the six-month period ending 28 February 2018
and the comparative six-month period.

Tyger Valley
19 April 2018
Sponsor: PSG Capital (Pty) Ltd

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