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BEE costs weigh on Pioneer H1 earnings
Pioneer Food Group (PFG) posted a 44% drop in its interim headline earnings to R236 million, primarily due to R161 million worth of once-off costs associated with the implementation of its phase two broad-based black economic empowerment (B-BBEE) deal.
BEE investors and the BEE Trust now own 8.5% and 5.0% respectively of the company's shares following the implementation of the transaction, which was first announced late last year.
Adjusted headline earnings, which exclude these once-off costs, declined 6% to R397 million or 221 cents per share in the six months to March 2012 on the back of inflationary cost pressures and softer consumer spending.
Chief executive Andre Hanekom said: "The volume decline of 6% in our product basket for the six months under review reflects the continuing strain of the consumer, with inflationary cost pressures persisting. The resultant 17% increase in selling prices was not sufficient to recover cost and meant our margins contracted over the corresponding period."
Pioneer operates through its four main divisions: Sasko, Bokomo Foods, Agri Business and Ceres Beverages.
"We are maintaining our diligent focus on cost control and efficiency gains to improve our margins and continuing to invest judiciously in growth assets to meet the anticipated recovery in demand as the economic environment improves," said Hanekom.
Adjusted operating profit declined 5% to R628 million, with the operating profit margin contracting from 7.9% to 6.8%.
Source: I-Net Bridge
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