Pioneer Foods 'studying' referral

The company was releasing its interim report for the six months ended 31 March 2008. Pioneer Foods has received a complaint referral from the Competition Commission in connection with the alleged operation of a bread cartel within South Africa.

Should Pioneer Foods ultimately not be successful in its defence against the complaint, an administrative penalty may be imposed in terms of section 59 of the Competition Act.

The amount of the penalty, the group said, would be determined by taking into account various factors listed in section 59(3) of the Competition Act, "but may not exceed 10% of the annual revenue of Pioneer Foods".

"The Group remains firmly committed to participate constructively with competition authorities and other parties to facilitate a speedy conclusion of the matter." The company said that no provision for a possible penalty had been made.

However, the board appointed a sub-committee to oversee the process and management's handling of the investigation.

"External experts have been appointed to assist on various fronts, ranging from legal counsel to forensic investigation," Pioneer Foods said.

For the six months ended March 31, 2008, revenue was up 25% to R7 billion; operating profit before items of a capital nature was up 11.7% to R395 million. Operating profit margin was 5.7% compared to 6.3% previously.

Headline earnings were up 10.0% to R222m while headline earnings per share rose 8.8% to 144 cents. Net cash utilised by operations came in at R99m from R106m generated previously. The interim dividend per ordinary share rose 11.1% to 30 cents.

"As expected our margin and cash flow has been impacted by very high input costs. We expect these pressures to continue in the second half of the financial year," said Andre Hanekom, Pioneer Foods' managing director.

"We will continue to act responsibly in addressing margin pressure to achieve an optimal balance between the affordability of our products for the consumer and the sustainability of our operations," he added.

Source: Sapa

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