Clover still has its eye on the rest of Africa

"We are excited about opportunities in Africa‚ but we are cautious‚ we do not want to rush into anything - we want to do it properly‚" he said at the release of Clover's results for the year ended June.

Consumer spending in Africa is projected by McKinsey Global Institute to reach US$1.4-trillion in 2020‚ from about $860bn in 2008. Branded goods companies have scrambled to capture a share of the growing market.

Vorster said the main challenge in Africa remained the route to market but the company was on the lookout for sites for its own production facilities in Nigeria.

"There has been a move from informal traders to formal retailers and it would be a natural market for us. It will become easier to do business in Africa as others such as Shoprite pave the way‚" he said.

In the year ended June‚ consumers continued to downtrade‚ he said.

Improved product mix and selling price increases combined with good volume growth helped Clover increase earnings in the period.

Headline earnings grew 18.6% to R207m from R175.2m in the previous year. The 16.4% increase in operating profit and a 36.3% reduction in net financing costs contributed to the rise in headline earnings‚ the company said.

Revenue rose 10.4% from R6.5bn to R7.2bn thanks to services to its principles and good volume growth‚ while its operating margin for the year under review improved from 4.9% to 5.1%.

Although it is a relatively small part of its business‚ Clover is one of the country's largest providers of chilled and ambient distribution services. During the period it increased revenue from rendering services to principals by 18.9% as a result of additional distribution capacity‚ volume growth and new business won during the year.

The company embarked on a restructuring programme called the Cielo Blu project‚ aimed at redressing historical inefficiencies in its distribution network. The project is set for completion towards the end of next year.

During the months of January‚ February and March milk prices were increased by 60c a litre as a result of continuous input cost pressures at farm level. This had the desired effect of stimulating milk flow‚ the company said.

However‚ the milk price was subsequently reduced by 20c a litre from August‚ ahead of the high milk producing season in order not to over stimulate milk flow‚ the company said. "Cost pressures on farms have‚ however‚ not abated‚ and adjustments will be made when considered necessary subject to market conditions."

Vorster said a milk price increase could be on the cards in the year ahead as a result of input cost pressures at farm level‚ which could put more pressure on selling prices.