A raisin crop shortfall and a stronger rand hurt the group's international operation. Operating profit in the essential foods division dropped 49% to R331m in the six months to March as a result of high maize prices, though the company expects costs to ease going into the second half of the financial year.
The expected bumper harvest has already led to a significant decline in grain prices, with white maize for July delivery now fetching R1,792 a tonne, from more than R5,000 in the first half of 2016.
"The groceries performance was disappointing, beverages in particular. Cost push inflation into the summer season coupled to a cooler summer inland, impacted volumes and margins significantly," the company said in a statement.
Operating profit in the international segment dropped 73% to R69m as a result of lower volumes of beverage exports and a stronger rand.
But Pioneer, which owns White Star, among other brands, expects a better performance in the second half of the financial year because of increased raisin supply, and lower beverage and maize input costs.
The company kept the interim dividend per share steady from a year ago, at R1.05 per share.
Source: BDpro
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