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Pioneer Foods drops on trading update

6 Sep 2012

Early this week, shares in breakfast cereals‚ bread and juices manufacturer Pioneer Food Group (PFG) dropped as much as 4% to their lowest level since December 2010 after the group issued an 11-month trading update‚ warning of increased operating costs.

Revenue for the period under review increased by 10.5% to R16.7bn with volumes contracting by between 2% and 4% on average in the group's product basket as consumer spend remained constrained.

Price inflation on the group's basket of products is estimated at 13.5% for the period under review.

"Substantial increases in operating costs continued‚ most notably in electricity‚ payroll and transport costs. Grain prices have been volatile and are trending upwards again‚" said PFG. "Maize prices are back at historical highs following lower than anticipated crop estimates caused by severe drought conditions in the USA."

At 12.17pm Tuesday‚ 4 September 2012, the share was down 2.62% to R51.20‚ off its intra-day low of R50.25.