Clover diluted HEPS 108.7c vs 106.2c

Revenue rose by 10.4% to R7.2 billion and operating profit increased by 16.4% to R371.2 million. Headline earnings grew by 18.6% to R207.8 million.

The group declared a cash dividend of 13.4 cents per ordinary share.

During the period‚ Clover continued its strategy of investing in and concentrating on branded and value-added products. In most categories it increased its market share except‚ notably‚ UHT (long life) milk where there were new low-priced entrants to the market.

As a result of continuous input cost pressures at farm level‚ milk prices were increased by 60 cents a litre during the months of January‚ February and March‚ which had the desired effect of stimulating milk flow. However‚ the milk price was subsequently reduced by 20 cents a litre from August 2012‚ ahead of the high milk producing season in order not to over stimulate milk flow. Cost pressures on farms have‚ however‚ not abated‚ and adjustments will be made when considered necessary subject to market conditions.

Clover's major capital expansion and repositioning programme Project Cielo Blu is still on track for completion towards the end of 2013. No major delays‚ other than the delay at the Queensburgh distribution facility due to a new network design‚ or material over-expenditure‚ have occurred to date‚ it said.

The continuous drive to lower operational costs by increasing efficiencies has had positive results‚ with cost savings being invested back into lower selling prices to achieve the desired volume growth.

Revenue from the sale of products increased by 10.9%‚ with 2.4% of this relating to volume growth and the rest being attributable to a combination of inflationary price increases and improved product mix.

Revenue from rendering of services increased by 18.9% or R121.6 million as a result of increased distribution capacity and consequent principal volume growth‚ together with the additional Epic Foods and Danone merchandising business. Revenue from the sale of raw milk to Danone‚ which is made at cost‚ decreased by 10.3% due to greater direct raw milk purchases by Danone in the market.

Raw material costs increased by 10.2%‚ mostly as a result of the farm-gate milk price increases of more than 20% early in the second half of the year.

Packaging costs increased by 6.7%‚ slightly above inflation‚ mainly because of the influence of higher oil prices on plastic packaging.

Looking ahead‚ Clover said the global economy is set to remain uncertain in the year ahead and it bracing itself for another difficult year economically in SA.

In spite of this‚ Clover is confident that the continued implementation of Project Cielo Blu‚ ongoing cost-savings drives and other margin-enhancing projects approved by the Board, will ensure Clover retains a healthy market share and strong balance sheet.