Pioneer Foods earnings down 18%

Diluted HEPS, however, rose to 398.3 cents per share from 131.2 cents a year ago.

The adjusted headline earnings take into account the Competition Commission's administrative penalty imposed on the food company a year ago for its anti-competitive behaviour in the baking industry.

The group's revenue increased by 7% to R16.9 billion with volume growth of some 3% and inflation of 4% in the product basket.

Operating profit before items of a capital nature declined by 15% to R1.1 billion, resulting in a margin of 7.1% compared with 8.9% a year earlier.

Pioneer declared a final dividend of 40c per share.

The maker of Bokomo Cereals, White Star Maize and Sasko bread, said the results were impacted by rising input costs, lagging price increases and volume pressure in most categories.

Revenue from specified bread and wheaten flour products were impacted negatively by delayed price increases to implement the gross profit reductions as agreed with the Competition Commission as part of the settlement reached in November 2010.

Pioneer said its Agri division experienced a challenging trading environment, largely due to the substantial increase in maize and other raw material prices, especially in the second half of the financial year.

The overall performance of the Bokomo Foods business improved during the financial year.

However, results were marginally down due to a R19 million abnormal gain included in the prior year relating to the insurance recovery following the 2009 fire at the Upington raisin factory.

Ceres Beverages achieved mixed results, the company said.

"We achieved satisfactory volume growth of 3% in an inflationary environment with prices rising by some 4% on average across our product basket.

"Margins compressed as continuing efficiency gains and cost containment were outweighed by lagging price increases and start-up costs in the expansion of operations in Gauteng," said CEO Andre Hanekom.

"In the trading environment, soft egg prices and heightened competitor activity in the fruit concentrate mixture category together with the poor raisin crop added to margin pressure.

"Vigilant margin maintenance and consumer-focused product innovation places the Group in a favourable position to participate in profitable volume growth, recognising the constrained spending environment."

Looking ahead, the food group said it was in a favourable position to participate in profitable volume growth, recognising the constrained consumer spending environment.

It noted that continuing inflationary cost pressures and shifting consumer spending patterns would influence its financial performance in the new financial year.