Fine hits Pioneer Food profit

Johannesburg - Pioneer Food Group [JSE:PFG] on Monday posted a drop in first-half headline earnings per share, weighed down by a price-fixing fine which will also depress full-year earnings.

Pioneer Food, which produces Sasko bread, Weetbix breakfast cereal and Liquifruit juices, said headline earnings per share fell to 81.7 cents from 166.4c the previous year.

The company's earnings were hit by a fine of R1.6bn for fixing wheat milling prices.

On an adjusted basis, headline earnings per share in the six months to the end of March rose to 281.1c from 169.9c in the same period last year.

"Our cost base benefited from lower grain commodity prices, but rising electricity, fuel and payroll costs have placed additional pressure on margins," MD Andre Hanekom said in a statement.

Revenue dropped 5% to R8bn.

"Given the solid operational performance for the reporting period, an improved operational performance for the full year is likely although at a lower growth rate than in the first half of the year," the company said.

Full-year headline earnings are expected to decline due to the provision for potential administrative penalties, it said.

The group said electricity price hikes, a rise in the oil price and above-inflation wage and salary increases pose a risk to all the its production costs.

"These cost factors and the recently introduced wheat import tariff have the potential to place slight upward pressure on selling prices," the group said.
 
- Reuters